Five things we learned about beating low pay in Wales

(Title Image: Wales Online)

Communities Committee
Making the economy work for people on low Incomes (pdf)
Published: 23rd May 2018

Chair’s Statement, John Griffiths AM (Lab, Newport East):

“We all believe in the importance of work, not just as a means of supplying income, but the broader benefits of work for an individual, their family and their community. However, changes to employment practices and the types of work that are available are driving up levels of in-work poverty. This is unacceptable.”

1. The Welsh Government understand the problem but are struggling to find solutions

Prosperity for all is the Welsh Government overarching economic strategy. When the strategy was first unveiled the First Minister said prosperity is “about more than material” wealth and includes a high quality of life, comments echoed by the Bevan Foundation who emphasised the need for “quality jobs”.

The main measure of economic prosperity and productivity are Gross Domestic Product (GDP) and Gross Value Added (GVA) – see more at How Rich is Wales? There were calls from numerous witnesses to move away from this area of focus and include measures that reflect the quality of jobs and living standards.

The Committee was “sympathetic” to calls for clear targets and deadlines, but they believed the Welsh Government had, “correctly diagnosed the problems and is halfway to finding solutions but not quite there”.

2. “Employability” is important

A number of witnesses stressed the importance of employability support in securing better-paid jobs for people. The Joseph Rowntree Foundation called for more specialist support for those who were “furthest away from the job market” while the Bevan Foundation wanted additional focus on keeping people in work once they find a job saying, “There’s no point getting people into jobs they lose after a fortnight”.

Some of the possible solutions suggested by witnesses included a “one-stop shop” service to access different employment schemes, improvements to careers advice and a more structured way of providing support between the job centre and Third Sector providers.

The Committee criticised the fact that a Welsh Government “employability plan” was only published in March 2018 – too late to feed into the issues around the winding-down of Communities First.

3. Ethics should play a greater role when making business support decisions

The Committee was concerned about the growing “casualisation” of the labour market (i.e. zero hour contracts, “gig economy”), with the number of hours worked and notice given to work those hours often as important as pay rates.

Witnesses compared the situation in the UK with France. France has a high minimum wage, strict employment contract laws and almost 100% of workers are covered by collective bargaining agreements. In the UK, unions have little influence, there’s little to no collective bargaining and the minimum wage is very low.

Variable hour/zero-hour contracts were said to be rare outside the UK and are sometimes illegal. Trade unions called for them to be banned, while Chwarae Teg said 55% of workers on zero-hour contracts were women. Men were also more likely to leave low-paid work than women.

The Committee said the Welsh Government should ensure that any company applying for business support to minimise the use of zero-hour contracts or at the very least commit to moving workers on such contracts to secure contracts after a certain length of time.

4. A “Real Living Wage” should be paid across Wales

At current prices, the “real living wage” – at which a person can generally meet the cost of living on a full-time contract – is £8.75-per-hour in Wales. The statutory living wage is £7.83-per-hour for the over-25s and minimum wage is £7.36-per-hour for the under-25s.

The Committee said the “economic and moral” arguments for universal adoption of a living wage have been made. A number of public sector bodies were moving towards adopting the living wage, but there were lessons to learn from Scotland with regard to the private sector.

The Scottish Government launched a campaign to raise awareness of the living wage and also launched an accreditation scheme for employers who pay it.

5. There’s broad support for the devolution of some welfare powers (….apart from the Welsh Government)

The Committee heard evidence that the roll-out of Universal Credit by the UK Government has been an unmitigated disaster, including payment delays (resulting in rent arrears), disadvantaging people in abusive relationships through joint claims, sanctioning people who were in work (and who are still expected to make and keep Job Centre appointments) and up to 63% reductions when a person finds work.

The Welsh Government have some welfare levers at their disposal including prescription charges, regulation of social housing, council tax support and both discretionary housing and assistance payments.

Some organisations, including Swansea City Council, supported the devolution of the Work and Health Programme. The Bevan Foundation went a step further and called for the devolution of housing benefit and welfare associated with childcare.

Economy & Infrastructure Secretary, Ken Skates (Lab, Wrexham) was opposed to any devolution of welfare on the belief that the welfare needs of people across the UK should be met centrally as part of some vague concept of “social solidarity”.

The Committee tacitly supported (with further work) the devolution of administration of Universal Credit (as in Scotland) so changes can be made as to how and when payments are made to address some of the problems that have arisen.

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