The concept of the minimum wage is certainly attracting a great deal of media attention. Over the last week we have seen comments on developments not only in the UK regarding this subject but also in Switzerland.
The leader of the main UK opposition, Ed Miliband, announced plans last weekend to increase the minimum wage in the UK in the event that he is successful at the next general election. Miliband was not drawn on picking a figure out of the air but his proposals marked the first occasion when Labour has actually looked at a long term link between the minimum wage and median earnings, as opposed to setting a figure in cash terms. Miliband’s proposals will seek to reach any defined target over a 5 year period.
It is interesting to note that the recent Resolutions Foundation Commission Report chaired by Professor George Bain (the first chairman of the Low Pay Commission) gave a figure of an average of 60% of average earnings as a reasonable objective. If this was the target it would put the UK minimum wage in the top third of developed countries.
Concurrently there have been some interesting developments in Switzerland regarding the level of the minimum wage. Some readers will recall that Germany is to implement a national minimum wage and it would seem that this has sparked some debate in that geo-political arena.
The Swiss have always adopted a very egalitarian and democratic approach to deciding such matters and recently had a referendum on whether to bring into effect what would have been the world’s highest minimum wage. The plan was such that employers would have had to pay workers a minimum of 22 Swiss francs an hour. This equates to approximately €18 and £15 an hour. This was rejected by 76% of voters. However supporters said it was necessary for people to live a decent life.
Electorates and economists are starting to talk more about issues in relation to a decent standard of living/fair wage across Europe. This was the third referendum on pay in Switzerland in the last 18 month period which reflects significant concern amongst the population that there is a growing and irretrievable gap between rich and poor in Switzerland.
This debate is one which readers may want to follow as clearly there are some signs that the global recession is easing. However the ramifications of the recession, especially on low paid workers, are now stimulating debate about the balance between social cohesion and economic productivity.