Government should stick to plans to abolish low pay despite coronavirus crisis, says Resolution Foundation

Britain’s low-paid workers have been at the heart of the COVID crisis, and the case for rewarding them 'is stronger than ever'

The government should stick to plans to abolish low pay despite the coronavirus (COVID-19) crisis, according to the Resolution Foundation.

In Low Pay Britain 2020, the Resolution Foundation says that, while the UK entered the COVID crisis with the proportion of low-paid workers across Britain falling for a sixth successive year to 15.5 per cent of the workforce - its lowest level since 1978 - low-paid workers have faced the greatest economic impact from the pandemic and the greatest health risks.

The Foundation goes on to argue that - while the crisis creates a challenging and highly uncertain environment in which to set minimum wage policy - the risks of setting the minimum wage too high or too low should be mitigated, for example by -

• protecting the £20-per-week addition to universal credit and tax credits that was introduced in April 2020 - this would increase incomes in the bottom decile by 14 per cent, compared to a scenario in which awards drop back to their pre-2019 levels (uprated by inflation), as is current government policy; and
• introducing both broad-based fiscal stimulus (supporting demand and giving businesses the confidence to retain workers), and targeted wage support policies such as sector-specific wage subsidies.

In conclusion, the Foundation urges the government to stick to the target of ending low pay by 2024, and says that it should also look to other ways to reward low-paid workers beyond a higher minimum wage, such as stronger enforcement of the legal wage floor, a new right to a contract that reflects the actual hours they work, and a right to compensation where shifts are cancelled without reasonable notice.

Senior Economist at the Resolution Foundation Nye Cominetti said -

'Britain’s low-paid workers have been at the heart of the COVID crisis.

At the height of lockdown, low-paid workers helped keep Britain afloat by looking after our loved ones and ensuring that we all had food to eat.  But as Britain enters the next phase of the crisis, low-paid workers in sectors such as hospitality and leisure also face the biggest risk of redundancy.

Given the shock to the economy, the minimum wage looks set for its smallest rise in a decade next April. While caution is justified the case for rewarding these workers is stronger than ever, and there is no reason for the government to back away from its target of abolishing low pay entirely.'

For more information, see Minimum wage set for smallest rise in a decade, but government should stick to plans to abolish low pay from resolutionfoundation.org.uk