You’ve probably heard a lot of rhetoric from the Tories about this supposedly “high-wage economy” they’re creating. If you have, it might surprise you to hear that there are almost a quarter of a million working people in the UK getting paid less than the legal minimum to which they are entitled. Sports Direct may be just the tip of the iceberg.
George Osborne may think that raising the minimum wage, and rebranding it as a “living wage”, is enough to convince people that his is the party of workers. But the truth is that this Government isn’t even enforcing the minimum wage we already have.
In passing the National Minimum Wage Act in 1998, the then-Labour Government did more than just establish the legal right to a minimum wage, significant as that was. More importantly, the Act made non-compliance a criminal offence.
Thanks to the Tories, the mechanisms for enforcing the right to a minimum wage, and by extension the right itself, are now being comprehensively watered down.
It’s now almost three years since an employer was last convicted of a criminal offence under the 1998 Act. This comes as no surprise given that the division responsible for prosecuting rogue employers has had its budget and workforce cut for the last two years in a row.
The Government insists that there is nothing sinister, or even unusual, about the current dearth of enforcement activity. They argue that prosecutions have never been routine, and that the overwhelming majority of offences are dealt with either informally by HMRC, by issuing a Notice of Underpayment, or as a matter of civil law.
But it’s difficult to know whether this is actually working or not, because the Government won’t give us the data. Asked how many people actually receive the money they are owed following these kinds of interventions, Ministers say that they don’t know.
If the Government can’t be relied on to enforce the law on employees’ behalf, it falls to employees themselves to challenge rogue employers on an individual basis. In theory that’s what employment tribunals are for. But here, too, the Tories are making justice harder to access, not easier.
The destructive impact of employment tribunal fees, which were introduced in 2013, is by now well known. But it bears remembering that the effect on certain types of cases, particularly those challenging underpayment of wages, has been disproportionately harsh. That’s because in these cases, the fees are usually well in excess of the amounts workers are seeking to recover in the first place.
According to the Low Pay Commission, employees found to have been paid less than the minimum wage are usually owed, on average, around £205 each. But considering that it now costs £390 to take such a case to an employment tribunal, it’s unsurprising that the number of claims for underpayment has fallen by more than 70% since the introduction of fees.
To be clear, this hasn’t happened because the problem of non-compliance has gone away. It hasn’t, and the Tories have no excuse to turn a blind eye to the problem.
Criminal prosecutions may have been rare for a long time, but they only should be rare if the right to a minimum wage is being properly enforced by other means. Based on current evidence, it isn’t. Laws protecting this right – whatever the level of the minimum wage, and whatever the Government chooses to call it – are only as strong as the threat of enforcement is both real and feared.
Low pay is a serious problem, and its victims need a genuine solution.