There has been much media talk recently about the difference between the minimum wage, and the living wage, with politicians waxing lyrical.
Setting aside the pros and cons, one indisputable fact is that more people are in employment than ever before. The current level is 73.1 per cent of the working population, equalling the highest since 1975.
I am sure that most people would rather be in a job, than on the dole, even if they do not like the nature of available work, or the of pay. At least a living is being earned, which can always be a stepping stone to something else.
If employment levels continue to rise, then this will lead progressively to better pay as employers search around for quality employees, especially those with skill, which is becoming scarcer.
This occurred in the early 1950s, especially in the West Midlands. Rapidly expanding car factories desperately needed staff to man the production lines, and solved the problem by offering better rates than any other employer around. This in turn meant that suppliers had to increase their rates. It became an ever increasing spiral, ultimately leading to double figure inflation.
A sensible balance needs to be struck, where unemployment is kept as low as possible with fair rates of pay being offered. However, it is essential that costs are contained, thus enabling us to compete in world markets.
Since the introduction of the Minimum Wage in 1998, the yearly increases announced by Government has always been slightly in advance of inflation, and this year is no exception. So slowly but surely, workers on basic rates are getting a better deal, especially when compulsory pension contributions by employers are taken into account.
However, the obscene rates of pay being offered in some industries such as banking have got completely out of hand, and it is understandable when union leaders make political capital of this. The Government should endeavour to ensure fairness, and was quite wrong to reduce the top rate of income tax. This has caused a lot of resentment.
Increased rates of pay will be offered as the natural forces of supply and demand become manifest, but the more people in work, the better for all.
* Russell Luckock is chairman of pressings firm AE Harris
