A living wage or a solidarity wage?

I’ve been following an interesting discussion on the Living Wage.  George Osborne’s adoption of the term for an improved, but parsimonious, national minimum wage undermines one of the key points of the campaign, which was to ensure that people would receive a wage that was adequate to live on.  There are reasons to question any approach based on minimum standards, or to suppose that a hourly rate is sufficient to offer that minimum.  That said, the campaign (as presented by the Living Wage Foundation) has won the argument that the minimum wage is not adequate, and needed to be raised.  That  is a major achievement.

Any case based on minimum income standards should apply only to those paid the least – that follows from the definition of the minimum.  That approach is necessarily  limited.  I think the time has come to argue for a solidarity wage.  When the idea was introduced in Sweden, it had three main elements:  equal pay for equal work, collective  wage bargaining and narrowing pay differentials.   It’s the third of those that interests me most; the solidarity wage was used to promote greater equality, and to defend people in undervalued work.   There was no problem, the Swedes suggested, about recruiting people to be chief executives or captains of industry; competition for those posts is fierce and people do not need high salaries to be persuaded to occupy them.  By contrast, there is nothing like the same competition for jobs as cleaners or care assistants.  Raising low pay offers incentives to  increase productivity while rewarding labour more fairly.

What’s really interesting about the policy is not that the premises were found to be true or false:  it’s that as things turned out, the assumptions didn’t really matter very much.  That’s enough to show us that most of what we tell ourselves about the system of incentives and rewards is baseless.  The rate that people receive for jobs is almost wholly a matter of social convention, and if a system works, it can work just as well after pay structures are adjusted.

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