The minimum wage is meaningless if we don’t treat workers with respect

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The minimum wage is meaningless if we don’t treat workers with respect

October 3, 2021 Cab4Now News 0

Last week, Labour members backed the fight for a £15-an-hour minimum wage at their annual party conference in Brighton. The vote, which may or may not inform the party’s future policy, has kicked off a debate over what figure the UK should be aiming for as a basic wage floor.

But this bold declaration of intent is almost meaningless in the current employment environment. The legal hourly minimum has risen just over 46% in the past decade to £8.91 an hour, but this is a fig leaf of achievement. Widely touted by the current government, it masks poor employment regulation, meaning millions of struggling families have not seen the full benefit.

As the minimum wage has increased, so have insecure forms of work. The gig economy and zero-hours contracts are used by employers to counter the cost of the headline basic wage.

Many companies claim their workers are independent self-employed contractors, and they have used this arrangement to avoid paying the minimum wage altogether, or to hold back benefits such as sick pay and holiday pay. The problem is compounded by weak enforcement of employment law.

There is no employment ombudsman or watchdog to make sure the rules are followed. Workers must use an employment tribunal to claim their rights to the minimum wage and other benefits.

Drivers for Uber’s private-hire service had to take their case all the way to the UK supreme court, an endeavour that took more than five years, before the US tech company accepted it must grant them holiday pay and pensions, and guarantee at least the minimum wage. Uber has yet to spread those benefits to its food couriers at Uber Eats, who it still argues are self-employed contractors.

Similar private-hire companies and delivery firms are still fighting legal battles over the details of workers’ rights, at a time when thousands are struggling with rising bills. Beyond pay, basic benefits such as toilet facilities or sleeping accommodation for long-distance drivers remain a pipe dream, when unions say they should be an enforceable working right.

In high street stores, workers may not be classed as self-employed, but insecure flexible contracts are used to keep pay at a minimum. Use of zero-hours deals, under which workers have no guarantees of their weekly working time, has soared to affect 917,000 people in the UK, or 2.8% of those in employment. That’s almost five times the level it was 10 years ago, according to the Office for National Statistics.

The zero-hours flag bearer, the owner of Sports Direct, once pledged to weed out their use after a public outcry, but has done the opposite. It the past year it has introduced the contracts at its newly acquired businesses Evans Cycles and House of Fraser. The company last week excused the move as “tough decisions that don’t work for everybody” as it lined up a potential £100m bonus for its incoming boss.

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Elsewhere, major UK companies, including Tesco, Sainsbury’s, Morrisons, Pret a Manger and B&Q have in recent years offset rises in the minimum wage by cutting other benefits – from paid breaks to bonuses, and extra pay for Sundays and bank holidays.

In the hospitality industry there is also widespread abuse of tips and service charges, with businesses holding on to the cash or using it to top up wages of managers or chefs. Recently, waiting staff at Pizza Express saw a slice of their tips diverted to kitchen staff.

With workers treated so poorly, and the flow of migrant labour throttled by Brexit, employers are struggling to attract the staff needed to drive delivery trucks, shift goods in warehouses or clean floors.

Whether the legal minimum wage is £15, £10 or £8.90, the labour shortage will persist until staff are treated with more respect and care.

Sunak must seize chance to reform business rates

There is widespread agreement that the business rates system is overly complex and unfair. Every review of Britain’s high streets stresses how much damage the tax does to shops and other bricks and mortar businesses as they struggle to compete with online firms that have little or no physical presence.

Such is the emotion generated by the debate about a replacement, the government has pledged to produce a white paper to propose reforms. The document could emerge in a couple of weeks, though Whitehall insiders expect it to appear alongside documents to accompany Rishi Sunak’s budget on 27 October.

In one of the few standout policies from last week’s party conference, Labour shadow chancellor Rachel Reeves proposed freezing business rates, then phasing them out. The lost revenue – £31bn in 2019, prepandemic – would be replaced by a “modern” business tax, though Reeves has not given further detail.

Forty years ago, local authorities applied a levy based on locally calculated rates before Margaret Thatcher’s Conservative administration introduced a national system that collected money centrally and redistributed it to councils.

The British Chambers of Commerce wants the chancellor and his new review partner, housing minister Michael Gove, to again allow councils to judge the level of rates in their area. It also wants the system, which raised £26bn last year, to exclude improvements to business premises from the rateable value. For instance, a firm that puts solar panels on the roof has made the property more valuable and is slapped with a higher rates bill.

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Sunak and Gove should grab this opportunity for a fundamental reform. Coupled with a broader tax on the sales of digital services companies, a freshened-up system of business rates could serve as a fairer levy on activity.

Immigration policy needs to be flexible to beat skills shortage

Simon Wolfson, chief executive of Next, ventured on to dangerous ground for a pro-Brexit business leader last week. In the context of supply chain strains and shortages of HGV drivers, he called for a relaxation of immigration rules and “a more decisive approach to the looming skills crisis”. Cue accusations of hypocrisy, or at least naivety. A Brexiter complaining about a crisis that has been intensified by the UK’s exit from the single market knows what’s coming.

But, actually, there’s a reasonable defence. Indeed, it’s the one that points to the most serious charge against the government: failure to plan for Brexit, anticipate skills shortages and use the immigration system to provide relief.

Lord Wolfson, note, argued back in 2016 that the UK was voting for independence, rather than isolation, and that the economy would be “finished” if ministers cut immigration to the tens of thousands. As he put it this week: “A demand-led approach to ensuring the country has the skills it needs is now vital.”

The government’s mantra that businesses should throw money at the problem by raising HGV drivers’ wages, and investing in training, is an inadequate response, as is the belated granting of 5,000 temporary visas for HGV drivers, which expire on Christmas Eve.

As retailers and hauliers are being forced to acknowledge, labour and transport costs will have to rise – a good thing, too. But markets must also be able to adapt to demand when long-term remedies can’t arrive soon enough. The risk in the government’s minimalist approach is that skills shortages become the dominant theme of 2022, with sectors such as care homes and hospitality suffering more than retailing, which, in the end, usually copes.

Wolfson’s intervention cut to the core of the divisions within the Brexit camp. Ministers argue that any change to immigration quotas would be a sticking-plaster solution. In the real world, business just wants an approach that recognises that, even when wages rise, some skills will still have to be imported. This battle is going to run and run.

Cab4Now Tweets

@MCab78 @glenda_hoddle @Gett_UK But it is illegal. Always has been. Always will be.

London taxis can only charge what is on the meter. If @Gett_UK kept the additional fees but did not rebate any part of it to the driver that would be, perhaps, within the law.

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