Recent high-profile converts are bringing headlines and new vim to the debate on working poverty. Good. But with this comes a cacophony of confusion about the National Minimum Wage (NMW), Living Wage, the role of tax credits and the likelihood that a recovery in earnings will compensate for cuts to in-work support. And this risks obscuring both the implications of what the Budget might mean for working poverty as well as alternative, practical, policy solutions.
The first muddle concerns the idea that in one bold gesture we could merge the NMW and Living Wage. From its conception, the NMW has acted as a wage floor that takes account of potential risks to employment. In contrast, the Living Wage is unencumbered by any job considerations: it is driven by changes in the cost of living (and the public’s perception of what a minimum standard of living looks like). That’s a big difference. It’s for this reason that the Living Wage Foundation opposes making it mandatory as many firms, particularly small ones, would struggle to adapt. Equally, those who’d like to see a more ambitious remit for the Low Pay Commission don’t propose making it chase the Living Wage. The NMW and Living Wage are, and will remain, distinct.
Content from our partners
