I recently overheard a conversation in a grumpy Tesco checkout queue in south London. It was on a bitterly cold mid-winter evening and it ran a little something like this…
“I’m done, mate. We’re going to have to leave London. We just can’t afford to stay here any more.”
“But you’re working loads of hours. I don’t get it. I know minimum wage ain’t great but it must be enough on two jobs?”
“But isn’t it going up? The minimum wage, I mean?”
“Well, yeah. I hear it’s going up 3%. So what? What does that equate to, really? Like, 20p an hour, something like that.”
“It’s better than nothing.”
“It’s pathetic, that’s what it is. £1.60 a day on an 8-hour shift. A bag of chips on my way home. Or a fucking latte. If I was a wanker.”
£1.60 a day may seem negligible, and when you view it as 20p per hour it appears even more modest, but a 3% increase on a low income – where you could reasonably argue every penny matters a lot more than as it does to those on £50k plus salaries – could actually make a huge difference to your overall spending capacity.
Such a rise could indeed get you a bag of chips or a latte from your provincial Costa-Bucks-latest-fairtrade-bean-magnate. But over a year that £1.60 amounts to around £400. With that, you could have a decent overseas holiday that you’d have otherwise been unable to afford. Or you could get a premium sky sports package for the year. Or a fancy new fridge / freezer. Or trade-in your car for a better model. You just need to ditch the bag of chips and the take-out coffee.
The fake average
The average annual wage in the UK is around £26,500. There are of course some seriously big salaries that pull this average up and skew what’s really happening. The big dogs at the FTSE 100 companies average £4.3m a year for example. And there are plenty of regional differences to note too – London salaries are, as you’d expect, significantly higher than the rest of the country.
A nominal figure tells only half the story, too. I remember when I moved jobs – with the same company – from their regional office in Yorskhire to their HQ in London. My salary went up enormously, from £8,000 to £13,000. I was much better off in Yorkshire on the £8k!
I could afford to own a car there and had enough for a couple of pub outings a week, the odd takeaway and some decent clothes. On £13k in London I was hanging on like a thread for payday every month and a night out was an obscene luxury because all my money went on rent and travel.
The reality is that four in five new jobs are in sectors averaging under £16,640 for a 40-hour week. Working full-time on the £6.31 hourly minimum wage would gross just £13,124 in a year. And an explosion of part-time jobs shows that millions of workers can’t even earn that. So let’s not for one minute think that the majority of UK workers are on that £26k salary – that’s a complete nonsense.
Wages set to go up in 2015
There has been a lot of evidence to suggest we’re going to see some healthy rises in salaries this year. The economic recovery is in full swing and major companies in the US and the UK are by and large starting to thrive. We are very likely to see real earnings increase above inflation for the first time since 2007 and some forecasts are picking a spurt of 4% in 2018.
But again, where does this money flow? It’s not going to be a fair and democratic river of cash, I assure you. You can be pretty sure that these big companies will be rewarding from the top down and handing out chunky bonuses to the senior managers who haven’t had one for a good few years. I’d be amazed if they started at the ground-up.
Meanwhile, small to medium sized businsses, where a lot of minimum wage workers are employed, are a completely different kettle of fish. They’re not going to be in a position to ramp up their staff pay any time soon. It could be years until they play catch up.
Stagnant salaries since the 2008 crash have had a huge impact on UK families and the minimum wage is one potentially very big lever that the government can pull to help them out. They need to do exactly that, right now. Pull it!
This begs the question: Is the minimum wage, as a concept, the right way to go? Is it working? Can it work? What are the alternatives? After all, plenty of small, independent firms are flouting the minimum wage rules already. They need to be dealt with, swifty and with full force.
I have been close to the protests in Brixton over the last 12 months surrounding the calls for a living wage at the south London cinema chain. It’s caused a lot of publicity and gained some high profile celebrity supporters but the issue still remains. There simply needs to be more clarity and enforcement of the rules upon these businesses.
A 3% rise is a very good proportionate increase. I think anyone on minimum wage should be pleased they’re getting it. But I still think the minimum wage is way too low and, aside from an annual increase linked to economic indicators, there needs to be a fundamental review of the tiers and the rules.
Whether you’re on minimum wage or not, and whoever your employer, my mantra on pay remains the same: Take what you’re given, but never settle for it. Ask for a rise and when you get one ask why you didn’t get more. Then ask what you need to do to get more and go and do it. Then go back to step 1 and repeat ad finitum.
Skewing the average: Some of the big-hitters
- David Cameron £142,500
- Tony Hall (BBC boss) £450,000
- Mike Rees (Standard Chartered bank boss) £8,986,000
- Wayne Rooney £15,600,000
- Angela Ahrendts (Burberry boss) £16,900,000
- Adele £27,540,000
- The Queen £36,100,000
- One Direction £59,330,000
- Michael Jackson (deceased) £108,108,000
- Crispin Odey (hedge fund speculator) £14,200,000
- Carolyn McCall (easyJet boss) £6,430,000