Ed Miliband says he has a “pro-business agenda” despite plans to boost the minimum wage drawing criticism from business groups.
Speaking to the Post, the Labour leader said his party’s plans to increase the minimum wage by more than average wages in every year of the next Parliament would be positive for the country and its employers.
However, business leaders warned against political interference in the work of the Low Pay Commission, which makes recommendations about the lowest levels of pay.
Mr Miliband claimed there was a “low pay epidemic” in the UK and said Labour would set a target to move the national minimum wage closer to average earnings by 2020.
In a wider interview, he said that everyone – businesses included – had benefited from the minimum wage being introduced and the latest plans would boost productivity.
He said: “I think it is the right thing to do for the country and it is the right thing for businesses as well.
“We are going to set this over five years so businesses have time to adjust. We are going to consult with businesses about the precise figure, but the reality is we can’t carry on as we are with the low pay scandal that we have in this country.
“Lots of businesses have found that when they raised wages it raised productivity, it reduced staff turnover and it can lower their costs as well. It is the right thing to do, we have got to give businesses time to adjust, but we can’t carry on as a country with this low pay epidemic.”
Mr Miliband said there was “no future for Britain competing on the basis of low pay with the sweat-shops of the world”.
The Labour leader set out his plans in a speech in Walsall, outlining proposals to overhaul the Low Pay Commission.
It follows a report from Alan Buckle, former deputy chairman of KPMG International.
The Buckle report set out a new framework for the Low Pay Commission with a five-year target and a strengthened role in tackling poverty and raising productivity.
It also includes recommendations to strengthen the enforcement of the minimum wage and to encourage employers to pay the higher “living wage” – such as making it a condition of Government contracts – an idea to which Mr Miliband said he was “sympathetic”.
Mr Buckle said he believed his “core proposal” of a clear goal to increase the minimum wage over the life of a parliament was achievable and would be good for citizens, business and government.
“Making work pay, through an economy that supports a higher-skilled, better paid and more productive workforce, is the key to cutting the social security bill and thereby improving government finances,” he said.
But Katja Hall, chief policy director of the CBI, argued the best way to boost earnings was by raising productivity and called on the Government to improve school and vocational education and on businesses to offer more apprenticeships.
Ms Hall said: “I think we need to recognise that the system we have at the moment has been really successful and that system involves the setting of the minimum wage by an independent Low Pay Commission.
“They have done a really good job and we think it’s much better the job is left to them, rather than given to politicians.”
Simon Walker, director general of the Institute of Directors, said: “Whilst relatively high employment has been the surprising story of the recession, the flipside has been frustratingly slow wage growth during the recovery.
“Labour are right to push for workers to see the benefits of economic growth but the minimum wage must not become the subject of a political competition to see who can offer the most, irrespective of what the economy and employers can afford.
“The Low Pay Commission has done a good job of balancing the rate against inflation, economic growth, productivity and the effect rises would have on small businesses and young people.
“In contrast, setting a target linked to average earnings risks seeming a little simplistic. While growth has returned to the economy, productivity remains stubbornly low. Any increase to the minimum wage must be timed carefully, and ultimately reducing the tax burden on both employers and employees will help strengthen the position of those in low-paid jobs.”
The Labour leader, hinting at the role of new election strategist David Axelrod, said he would follow in the footsteps of US president Barack Obama and make boosting workers’ wages a “basic principle” for his party in government.
Mr Miliband told the Post there were many reasons for business leaders to vote Labour, but said the poorer-paid had to be offered a better share in the rising fortunes of the country.
He said: “If you are a small business, we are the only party committed to cutting your business rates, which is about making a real difference to the cost that small businesses face.
“If you are a small business or a large business, we are the party that is saying ‘let’s sort out the skills system’, so you actually have properly-skilled employees, let’s sort out our banking system so that it helps, let’s sort out our energy companies so it benefits businesses.
“I believe this is a pro-business agenda.
“There are lots of businesses that are also saying ‘when are you going to crack down on that small number of businesses that are not paying the minimum wage and who are under-cutting us?’
“That is why I think this is a pro-business agenda, helping businesses to succeed.
“Many businesses recognise you have got to have a decent infrastructure and you have got to treat your employees properly if you are going to succeed as a country.”
But Mr Miliband would not quantify what would be a reasonable level for the minimum wage, but said it was “too low”.
“I am not going to pluck a figure out of the air because the better thing to do is do a proper consultation,” he added.
“What I am saying very clearly, what your readers should know, is under a Labour government it will go up by more than average earnings over the course of the next Parliament. It will get closer to average earnings.
“I want the low paid of this country to share fairly in the rising wealth of the country.”
Meanwhile, he refuted claims that this was part of a lurch to the left, after Labour MP Simon Danczuk this week outlined concerns that the party was not occupying the centre ground, just days before local and European elections.
Mr Miliband said: “I don’t think it is a left-right issue. I think it is actually about what is right and what is wrong.
“I think people have a basic intuition from whatever part of the political spectrum you come from that hard work should pay and hard work doesn’t pay in this country. We have got to do something about that.”
