Osborne’s National Living Wage is a Complete Con

Budget day protest in Parliament Square, London 8th July 2015. Photo: Steve Eason

Budget day protest in Parliament Square, London 8th July 2015.
Photo: Steve Eason

Eleanor Firman, Unite Community activist and Left Unity member, shares her views on yesterday’s announcement by Chancellor George Osborne.

The compulsory National Living Wage which Osborne announced today is a complete and utter con. The media are hyping it as the Tories stealing Labour’s clothes but the miniscule Living Wage is not about Osborne getting tough with low wage-paying bosses – the reality is in fact the complete opposite: the Tory Chancellor is merely instructing businesses to return a tiny fraction of the money that has been stolen from our (social) wages and handed to bosses in the form of the employers’ National Insurance ‘allowance’ that began last year (up to £2000 per employer) and was increased by Osborne yesterday to £3000.[1]

Society seems to have forgotten that Employers’ N.I. contributions are actually part of wages – they are the portion of the wage that instead of being paid direct to the employee is forwarded directly to Treasury by the employer where it is pooled with all N.I. contributions and returned to workers in the form of the social wage i.e. the welfare state provisions of pensions, the NHS, compulsory education and social housing. So employer’s contributions are actually our wages but we don’t see it because it is paid on our behalf and then collectivised before we get our pay packet. This collectivisation includes spending in the form of social assistance for those who cannot work due to their impairments or those whose pay is inadequate.

This system of social insurance that began in 1946 is commonly referred to as the post war social settlement but understood by the left as a compromise between labour and capital to fend off rising social unrest: capital could keep a certain amount of profit if workers laboured not just for subsistence wages in the form of cash, but also improved social conditions.

Now public services and welfare are being dismantled and employers are being made to give back a tiny portion of their new N.I. allowance to the workers in the form of the new ‘national living wage’ – but the overall amount of tax and N.I. allowances bosses receive will more than offset a marginally more expensive workforce. Let’s not forget corporation tax was also cut to 18% along with other tax breaks for the rich.[2] So this national ‘living wage’ is not just a downgraded replacement of the higher voluntary living wage as many are pointing out, – but is actually a cut to the existing compulsory minimum wage.

Osborne was deadly serious when he described his budget as a new social settlement. But do the public realise what has really been lost? Less tax and less welfare does not just mean higher incomes for a few, and lower incomes for the many. It means less public services as well as greater financial inequality. Iain Duncan Smith’s reaction yesterday in the Commons and the following day in the Daily Telegraph, clearly signalled that for people like him who only came into politics to realise the vision of Margaret Thatcher, Osborne’s National Living Wage is a dream come true. For the rest of us it’s a laissez faire nightmare.

[1] https://www.gov.uk/employment-allowance

[2] In a bid to reassure businesses, the chancellor also reiterated that the cost to business will amount to one per cent of corporate profits, which he has offset with the cut in corporation tax to 18 per cent. Smaller firms would be helped by a cut in their national insurance contributions. From 2016, the new employment allowance will be increased by 50 per cent to £3,000 and a company employing four full-time workers on the new national living wage would pay no national insurance.
http://realbusiness.co.uk/article/30726-summer-budget-2015-compulsory-national-living-wage-gets-mixed-reception

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s