I spent over an hour last night completing a VAT return, the net result of which is that HMRC owe me £7.20. By complete coincidence that is the hourly rate of National Living Wage set by the Government for those over 25 which starts next month. (And if you think that is weak segue, I assure you that future blogs may well be worse). Spent an enjoyable hour yesterday in my first formal meeting with the Trades Unions debating how we should respond to this complex, and quite emotive issue.
It was in the July 2015 budget when the Government parked their tanks firmly on Labour's lawn by introducing a commitment to a new National Living Wage. But this isn't a greenfield site; the minimum wage was introduced by Labour in 1997, and the Living Wage Foundation provides accreditation for employers who meet their standards, which are different to those of the Government. Then there are regional variations: the local council has introduced an Edinburgh Living Wage and with this Government's passion for regional devolution, we may see more of these. It is a difficult decision for employers who are expected to navigate this set of legislation and advice, while judging the effect it will have on their business. There have been many media stories about how this will make employers uncompetitive and how the costs will simply be passed on to consumers. I am sure that colleagues in Economics can advise whether the introduction of a minimum wage is, overall, good for an economy.
For the last two years we have introduced arrangements to ensure that all staff receive (at least) the hourly rate proposed by the Living Wage Foundation. With the projections increasing well ahead of inflation over the next few years, we have some difficult decisions to make about how we take this forward. It will be interesting to see how other employers and the job market respond, particularly with the weaker growth predictions from yesterday's budget. Another complexity is how this is impacting a growing number of people in the University, and having the effect of 'compressing' the bottom of the pay spine. This isn't really sustainable. We have agreed with the Trades Unions that we really need to have a proper review of how the pay system works for the lower grades, and how we can balance our responsibilities as an employer and custodian of the business over the next few years.
As a TU member, I am very supportive of the need for good, evidence-based robust discussion on topics such as this. I look forward to seeing how this debate evolves and engaging in even more 'vibrant' dialogue.