I was pleased to see the Assembly recognise that the “Living Wage” is and remains total economic illiteracy. This was in response to an attempt to force the “Living Wage” to be paid by Government contractors.
There are two further problems here in addition to the main one in my original article on the subject.
Firstly, there is the direct problem that Government contractors would be forced to ramp up costs in order to cover these greatly inflated wages. These would indeed be “greatly inflated” because not only would those below the “Living Wage” have to be lifted up to it, but workers only just on it would then demand higher wages to compensate (as per my original article). Ultimately the key point is this, where does the money for these greatly inflated costs come from? The humble tax payer or from other public services, that’s where. (It was argued that these higher wages would automatically lead to higher productivity. If this were so, tenderers would already be offering them.)
This is to leave aside that if you are enforcing the “living wage” on government contractors, you would have to enforce it across the board in the public and voluntary sector as a natural progression. Try recruiting on behalf of an independent retailer, a door-to-door sales team or a logistics firm after that!
Secondly, there is the issue raised subsequently by another correspondent that the “Living Wage” is in any case total nonsense. The correspondent pointed out that the cost of living on the south coast of England is much higher than in Northern Ireland, and that thus it is ludicrous to posit the same “living wage”.
I would take this further. Consider on one hand a twenty-something bachelor living rent-free with no elderly relatives to care for; and on the other a thirty-something parent living with a mortgage, childcare costs, and elderly relatives (with say dementia and diabetes) who need hours if not days every week in care (and administration). The first of those could live quite easily on 7 quid/hour; the second would seriously struggle on double that.
It gets worse. The first of those actually has plenty of spare time (no care costs etc), and can therefore take on extra work or become engaged in activity which leads to extra work (say, joining a drama club where they get tipped off about delivery rounds or bar jobs; or even, dare I say, joining a political party and getting elected to Council), conceivably mustering 48 hours/week without any difficulty. The second has no spare time, it being taken up with care, administering bills, family emergencies, and so on, and thus cannot take on anything much over the standard 35 hours/week.
These are two entirely different lifestyles, and they result in wages going vastly further in one case than another.
A “living wage”? It’s great in theory. In the real world, it’s nonsense. It merely results in people in poverty having to pay even more for their services. Quite how that helps them, I’m not sure.
The Assembly was right to recognise that.