I’m proud that the last Labour government introduced the National Minimum Wage. This boosted pay for millions at the bottom without leading to a loss of jobs.
But we face different issues today. The minimum wage was originally designed to prevent extreme low pay and abuse. Today, the challenge is to help hardworking people that earn above the minimum wage but are still living in poverty. Over five million people, or one in five employees, are low paid.
This has got worse under the Tories, with families on average £1,600 a year worse off since David Cameron became Prime Minister. And the value of the national minimum wage has been eroded, leaving working people worse off.
Those on the lowest pay are at the sharpest end of the cost-of-living crisis. In-work poverty is a shocking legacy of the Tories’ four years in power and the next Labour government is determined to do something about it.
That’s why in Parliament this week I voted to set the Low Pay Commission a five-year target to raise the National Minimum Wage faster than average earnings. This will ensure that there is a bond between the wealth we earn as a nation and the wages that people earn for a hard day’s work.
This five-year target was recommended by Alan Buckle, former Deputy Chairman at KPMG, who was asked by Ed Miliband to investigate how to strengthen the minimum wage, as part of Labour’s plan to ensure that those who do a hard day’s work are rewarded for doing so.
A clear five-year target gives businesses time to plan and adapt their business models so they are able to support higher wages for their employees. Safeguards should be put in place to protect jobs in the face of economic shocks. Ministers have done nothing to support a Living Wage, but Labour would incentivise firms to pay more through Make Work Pay contracts to get people at work a better deal.
The Tories’ failure over the last four years have led to higher prices, lower wages and a cost-of-living crisis that has hit tens of thousands of people in Aberdeen South. Labour will create a new economy that works for everyone instead of just a few at the top, and that begins with strengthening the National Minimum Wage. Only Labour will tackle the scandal of low pay, growing our way to higher living standards for all.