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Labour back to socialist basics with Living Wage deal

Labour back to socialist basics with Living Wage deal

🕔12.Jun 2012

living wage

The very first decision taken by Birmingham City Council’s cabinet under Labour administration had a degree of symbolism about it, as well as pragmatism.

An immediate pay rise for more than 3,000 of the council’s lowest paid staff, many of them part-time women workers, will send out a message that Britain’s second largest city is back under the control of a party that manages to retain some of its socialist roots.

The wage award, which will be worth up to £600 a year for the very lowest paid workers, is also sound politics. Labour organisers will be hoping, when the next civic elections come around, that council employees remember which party awarded them an unexpected pay rise and vote accordingly.

Conservatives and Liberal Democrats, who ran the council until last month, gave Labour’s decision to adopt the Joseph Rowntree Trust’s Living Wage structure a mealy-mouthed welcome.

They didn’t oppose the principle of giving a helping hand to 3,000 people whose salaries are only slightly above the minimum wage – how could they? Neither did they say why, if it’s a good idea, they didn’t introduce the Living Wage when they had the chance.

Tory group leader Mike Whitby said he supported “in principle, the ethos  behind what you are doing” but went on to warn about costs escalating out of control and the dangers of staff further up the wages scale also demanding pay rises.

It’s the so-called ripple effect that should concern council leader Sir Albert Bore. The move to pay the Living Wage to staff on the lowest pay grade will cost about £1.3 million a year, which can be found easily enough from council cash reserves, but what happens if employees on the second lowest grade demand a similar rise?

It’s been a long time since the shop steward’s insistence that ‘my members won’t stand for their differentials being eroded’ was a familiar cry echoing across the UK industrial landscape. And deputy council leader Ian Ward was at pains to tell the cabinet he has held discussions with Birmingham trade union leaders who are happy about the impact of the Living Wage and supported it.

Naturally, the unions back a proposal to give a pay rise to six per cent of the entire council workforce. But Coun Ward’s assurances did not actually go so far as to confirm that the unions will not attempt to secure a similar increase for thousands of other poorly paid staff.

It’s an unpalatable fact that Birmingham City Council, in common with almost all local authorities, pays a large proportion of its workforce very low wages indeed. The myth that local government workers are swimming in cash is based on king-sized salaries paid to relatively few executives, while most of the ‘ordinary’ workers hover close to or even under the minimum wage.

It emerged five years ago that more than half of the council’s non-schools workforce – more than 24,000 people – would still be on grades paying less than the then minimum wage even after a new “fairer” salary system was introduced. Just over 35,000 employees would be unable to earn more than a basic wage of £23,000 under the new system.

The lowest paid of all, on grade one, will benefit from Labour’s decision to impose the Living Wage. The decision means that no council employee will receive less than £7.20 an hour, up from £6.39 at the moment. It would defy human nature if there was not now to be demands from those earning between £7.20 and £8 an hour for parity and an immediate rise.

But the pressure could become intolerable following a cabinet decision to hand over responsibility for reviewing the Living Wage level to an outside body. Coun Ward confirmed that recommendations for an annual pay review from experts at Loughborough University would be accepted by the council.

This could immediately place Living Wage recipients at an advantage. They might receive a pay rise when other council staff will not do so, pushing the 3,000 workers up to Grade 2 levels and beyond.

The possibility of this happening was set out in a cabinet report by council chief executive Stephen Hughes: “There is potential that the application of the Living Wage to the council’s current grading structure could have the effect of lifting those on the Living Wage onto the pay rates of Grade 2, so that an employee whose job content has been evaluated at Grade 1 is in fact paid at a scale point in Grade 2.

“In addition, there may be circumstances where the Living Wage is increased in a year and the council is not awarding a pay increase to any employees of the council in that year.”

Might the lawyers take an interest if one group of council workers is being treated more advantageously than others? Mr Hughes summed it up: “On a balance of probabilities it is likely that the council will be able to justify the differential treatment compared to other employees, on the basis that the application of the Living Wage is a proportionate means of achieving a legitimate aim.”

The ‘balance of probabilities’ being lawyer-talk for it will probably work out alright, of course.

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