Dissecting the UK minimum wage

Today, you can barely cover the price of a meal from Xananas with the UK’s hourly minimum wage. That’s just for those aged over 21. Let that sink in. Now, think about the people who actually have to live on that – support families, and raise children. With the recent increase in the minimum wage by 38p, the government has taken a step in the right direction, but if one actually goes through all the costs, it still does fall slightly short.

Data from gov.uk has shown that since 2012, year on year, wages have increased by only 4%, on average. Yet in 2016, the total UK household expenditure was approximately £525 per week on average – which roughly translates to £78 per day. This has increased from about £485 per week in 2012, according to data from the Office for National Statistics.  Although the rate of increase of wages is greater, one must also consider the fact that on £8.50 per hour, ends are not being met, even with a 48-hour week (the maximum someone can work per week in the UK). Even when factoring in reduced spending on restaurants and hotels, recreation and culture, and housing, the spending would still be around £400 pounds per week, allowing workers to save very little if they’re on the minimum wage.

Amazon has raised its minimum wage to match that of The Living Wage Foundation, which has a rate of £8.75 per hour

Recently, this matter has been receiving the media attention it deserves, due to a move by Amazon. The online commerce giant has raised its minimum wage to match that of The Living Wage Foundation, which has a rate of £8.75 per hour. Interestingly, the organisation also makes a distinction between wages across the UK, and those in London – with the “living wage” in London being £10.20. To all those acquainted with London’s extortionate prices (nearly everyone), this makes sense. The government, too, understands this; however, it only does so for visa requirements for foreign students, rather than its own citizens’ minimum wage. The government expects that an international student must have more money in their bank account if they are going to a university in London than if they were going to another city for their education. Meanwhile, it expects the prices to magically fall for those on the minimum wage in London.

It is understandable that part of the reason that the government is hesitant to increase the minimum wage is to ensure that people do have a job at the very least. It would not be very wise to raise the minimum wage to the extent to which companies have to lay off workers, because then there would be fewer people earning at all. A suitable middle ground must be reached – people, however, must be given some way to come out of poverty.

The issue of minimum wage will remain an issue until policymakers and employers learn to think of the human, rather than economic, cost

With Brexit looming and EU workers leaving, we can expect a greater demand for British workers, which would drive wages up, and could also enable the government to raise the minimum wage by a rate greater than before. However, that seems unlikely as things stand. However, the Living Wage Foundation (whose metric Amazon adopted) suggests that the government, rather than looking at the cost of living, just uses the median wage as a metric for calculating the minimum wage. As of the 2018 figures for the median wage (from the Office of National Statistics) and the minimum wage data, it can be shown that the proportion has indeed hovered around 60 percent; whether that can be taken as a deliberate act from the government or is simply a correlation remains to be seen. Since we expect wages to go up at a greater rate after Brexit, we can probably expect the same of the minimum wage (although to expect anything at this stage is ambitious, to say the very least). But as prices skyrocket after Brexit, disposable income should plummet, especially for those on the minimum wage.

What does that mean for us, though? As students, although not mostly current members of the workforce, we will be entering the working world in years to come. We must work to combat the issues, especially if we obtain positions of power. The issue of minimum wage will remain an issue until policymakers and employers learn to think of the human, rather than economic, cost.