04.06.1998

Poverty wage

Fight for what we need!

Fully in line with government requirements, the ‘independent’ Low Pay Commission has recommended an initial value for the statutory national minimum wage, to be introduced in April 1999, that is actually a sub-minimum wage. The commission advises an hourly rate of £3.60 for workers aged over 20, £3.20 for 18-20 year-olds, with 16 and 17 year-old workers and schoolchildren being exempted entirely. This falls far short of what is needed to maintain and reproduce the worker physically and culturally.

The commission’s terms of reference stipulated that it “should have regard to the wider economic and social implications, the likely effect on the level of employment and inflation, the impact on the competitiveness of business, particularly the small firms sector, and the potential impact on the costs to industry and the exchequer”. In other words, the factor governing the level of the minimum wage should not be the needs of the wage labourer, but what capitalism can afford.

Thus, the commission reports that, although it accepted that a higher rate “could make greater inroads into pay inequality”, it was “conscious we will not help low paid workers by recommending a rate which is so high their jobs are put at risk or they have to pay a lot more for everyday goods and services”. The justification for the lower rate for young workers is even more blatant - equal treatment with their elders “would lead to a particularly large increase in the pay of many young workers, which would cause excessive cost increases and threaten jobs”.

The commission has estimated that around two million workers will receive higher earnings if its recommended rates are implemented. However, the true impact of the proposals can be measured by the fact that the national wages bill will increase by a mere 0.6 per cent. A study by the Institute of Fiscal Studies, cited in The Observer (May 31), shows that many of these workers are in receipt of ‘in work’ benefits, which will be reduced as a result of the pay rise. An employee receiving the working families tax credit (which is to replace family credit in April 1999) and housing benefit, could lose up to 90% of any extra income gained as a result of the statutory minimum wage. About 100,000 people will lose all entitlement to benefit and the government will save about £300 million on the benefits bill. To a large extent what is being proposed is a simple transfer of capitalist payments from indirect funding via taxation to wages.

There were three trade union members of the commission - Bill Gates, general secretary of the knitwear union; Rita Donaghy, a Unison timeserver whose union has a minimum wage target of £4.61 per hour; and Bill Callaghan, an economics adviser at the Trades Union Congress. The commission’s report is prefaced with the statement,

“[the recommendations] were agreed unanimously, through social partnership. We believe they are simple and straightforward, prudent, and supportive of a competitive economy. We view the introduction of the minimum wage as a key element of the government’s wider reforms which aim to make work pay and help people move from welfare to work.”

The minimum wage legislation is indeed a key element of Blair’s wider project. It is part of the effort of capital’s chosen government to forge a new identification of the mass of the population with the United Kingdom state.

The owners of capital in Britain have let it be known that they are well pleased with the commission’s proposals. Sir Colin Marshall, president of the Confederation of British Industry, said they were “workable and reasonable”, whilst the Federation of Small Businesses said £3.60 was “a sensible starting point” (Financial Times May 29). Meanwhile, the same newspaper could not find a trade union leader prepared to put his or her name to a criticism of the report. It had to resort to the phrase, “The Low Pay Commission’s proposals were attacked by some trade union leaders”. The Observer coaxed out the mildest of criticism from Unison general secretary Rodney Bickerstaffe, who, we were told, has spent 35 years campaigning for a minimum wage, but is now taking a “phlegmatic” approach:

“The unions can take huge credit for having stuck out for so long and so hard and established a principle, but is £170 a week really enough for anyone to live on at the tail end of this century? We really ought to be aspiring for more” (May 31).

Bickerstaffe’s comment contains a conundrum. At £3.60 an hour, a worker would have to put in 48 hours a week to earn £170 gross. Does Bickerstaffe regard 48 hours as a normal working week? Or was he just too plain embarrassed to use the true figure of £144? Such bureaucrats will not even fight for a minimum wage equivalent to the value of labour.

Marx explained in Capital how the value of labour power is determined. Firstly,

“Given the existence of the individual, the production of labour power consists in his reproduction of himself or his maintenance. For his maintenance he requires a certain quantity of the means of subsistence. Therefore the labour time necessary for the production of labour power is the same as that necessary for the production of those means of subsistence; in other words the value of labour-power is the value of the means of subsistence necessary for the maintenance of its owner.”

He then refines this explanation:

“If the owner of labour power works today, tomorrow he must again be able to repeat the same process in the same conditions as regards health and strength. His means of subsistence must therefore be sufficient to maintain him in his normal state as a working individual. His natural needs, such as food, clothing, fuel and housing vary according to the climatic and other physical peculiarities of his country. On the other hand, the number and extent of his so-called necessary requirements, as also the manner in which they are satisfied, are themselves products of history, and depend therefore to a great extent on the level of civilisation attained by a country; in particular they depend on the conditions in which, and consequently on the habits and expectations with which, the class of free workers has been formed. In contrast therefore with the case of other commodities, the determination of the value of labour power contains a historical and moral element.”

And a further refinement:

“The owner of labour power is mortal. If then his appearance in the market is to be continuous, and the continuous transformation of money into capital assumes this, the seller of labour power must perpetuate himself in the way that every living individual perpetuates himself, by procreation. The labour power withdrawn from the market by wear and tear, and by death, must be continually replaced by, at the very least, an equal amount of fresh labour power. Hence the sum of the means of subsistence necessary for the production of labour power must include the means necessary for the worker’s replacements - ie, his children - in order that this race of peculiar commodity-owners may perpetuate its presence on the market.”

Marx then addresses the phenomenon of the depression of the price of labour power below the value which he has developed above:

“The ultimate or minimum limit of the value of labour power is formed by the value of the commodities which have to be supplied every day to the bearer of labour power, the man, so that he can renew his life process. That is to say, the limit is formed by the value of the physically indispensable means of subsistence. If the price of labour power falls to this minimum, it falls below its value, since under such circumstances it can be maintained and developed only in a crippled state, and the value of every commodity is determined by the labour time required to provide it in its normal quality.”

£3.60 an hour is a physically crippling price of labour power. Sellers who receive this price cannot feed, clothe, warm and shelter themselves and their children. The state recognises this and makes available top-up subsidies for the sake of social stability. But the moderate targets for the minimum wage, urged upon the working class by the likes of Unison and the Socialist Party, are themselves culturally crippling prices of labour power. They are destructive of the habits and expectations of the workers. The proponents of such targets do not act as conscious class leaders. They behave like merchants of labour power, thinking only of what they can bargain for.

The CPGB has calculated that workers need £285 for a maximum 35-hour week, or £8.10 per hour, in order to reproduce themselves physically and culturally. It recommends to the working class that this figure becomes a parity for pensions, benefits and student grants, and that it be used in the calculation of all other wage rates. These demands coincide with the needs of our class. Capital cannot afford to concede them. They are revolutionary demands. Unlike groups such as the SP and the Socialist Workers Party, the CPGB does not go out of its way to insist that capitalism can afford to grant the demands it advocates to the working class. The true minimum wage, the income workers need, will only be won by the conscious revolutionary self- activity of the working class.

Derek Hunter