Minimum wage, Zero hour contracts and Furlough

The fragility of employment levels in a post lockdown UK

As a concept, minimum wage is one which should make sure everyone who works can earn enough to live. As a rule, a minimum wage exists to prevent the need for someone to work more than one job. So why does the idea not work for so many people?

Minimum wage needs to be a basic living wage for everyone. No one should work multiple jobs, with no free time, just to keep their head above water. In the UK, this plan is failing for many.

The first minimum wage was introduced in 1999 by Tony Blair’s Labour government after being passed into law the year before. The first minimum wage was £3.60 an hour for people aged 22 and older and £3.00 an hour for a 18–21 year old. Before its introduction, it would be people on lowest wages who would see the smallest growth in what they earned.

As of April 2020, the minimum wage for over 25s is £8.72. It is a total which charity The Living Wage Foundation suggests is not high enough. They have suggested it should be £10.55 in London and at least £9 outside of the capital.

The concept of minimum wage has now been in place for over 20 years. Opposing Conservative MP’s, at the time, criticised the idea; stating that the minimum wage would drive up unemployment by squeezing out lower paid jobs from smaller businesses. Although this was not the case, it also wasn’t the full story.

A rise in the number of people in zero hour contract jobs has partially helped to give the figure a false reading. A zero hour contract is one between an employer and a worker, where the employer is not obliged to provide any minimum working hours, while the worker is not obliged to accept any work offered. They are also jobs which have little security, so it might make unemployment figures look healthier but the reality is thousands of people in precarious job roles.

The stats before 2020 looked relatively rosy for unemployment levels. In the last quarter of 2019, employment was up 1% and unemployment was down 5.4% in the same period in 2018. As well as this, regular average weekly earnings exceeded the peak earnings before the financial crash of 2008.

However, it is estimated that there could be one million people in zero hour contract jobs in the UK by the end of 2020. Therefore, in reality, the statistics do not tell the full story.

Despite the hollow figures, Conservative MP’s were positive of the downturn in the unemployment levels. In February 2020, Jacob Rees-Mogg tweeted of the ‘Boris Bounce’ which was creating new and more stable roles. Whether completely accurate or not, this came at a time before the coronavirus pandemic threatened many millions of jobs.

In fact, February 2020 feels like an eternity ago. The country has since moved into, and then gradually out of, a lockdown. Millions of us were placed on the government’s job retention scheme, with the true success of the plan only to be fully realised once people have been given the green light to return to the workplace.

Those who have questioned if the level of minimum wage is too low will potentially see evidence to support their argument in the coming months, but realistically there was enough of this prior to the lockdown. No one should need to work more than one job to sustain themselves, affordable housing and a family.

Unfortunately this isn’t the case, and many people will continue to fall through the cracks. In a post lockdown world, this situation may become far worse.