General Election – What Labour Should Say On Wages

Labour has committed itself to increasing the Minimum Wage to £10 an hour, and to ending zero hours contracts. Its a start, but nothing like enough.

In the early 1980's, when I worked as a temporary lecturer, my hourly rate was £25 an hour. That was great if you had 10 or more hours work per week, but, even for that time, not so great if your hours fell to just two hours a week, as it tended to do, later in the academic year. There is little point having a £10 an hour Minimum Wage, even if you scrap zero hours contracts, if many workers remain on temporary contracts, or part-time hours, amounting to only a handful per week.

Alongside the £10 an hour Minimum Wage, Labour should introduce a Minimum Weekly Wage of £300. That would mean that workers would have a guaranteed minimum amount of income each week, on which to be able to base their spending decisions etc. It would also mean that employers no longer have an incentive to employ workers on a casual basis, with part-time, or temporary contracts, because they would have to pay this minimum weekly amount no matter how few hours their workers were contracted to work each week.

Labour should also commit itself to introducing the same kind of Triple Lock on this Minimum Wage as has applied to pensions. That is the Minimum Wage should increase at least every year, in line with the highest of either the rise in average earnings, the rise in the RPI, or 2.5%. As the rate of inflation is already breaching the Bank of England's 2% target rate, and is likely to rise even faster as Brexit causes the Pound to fall, and Britain will face higher import costs as it pulls out of the EU, and goes to WTO rules, Labour should look at introducing a similar guarantee to all wages.

In the early, 1970's, the biggest pay increases I had came from the fact that Edward Heath's government introduced indexation of wages to prices, in the same manner as existed for some time with the Scala Mobile in Italy. With inflation rising rapidly, wages were increased each month, in line with the RPI.

But, there are other measures required. Obviously, an important measure in maintaining and defending wages is the strength of the trades unions, but I will deal with that in a separate post. Adam Smith understood that it is labour that produces value and surplus value. He also realised that as soon as capital existed, a part of that surplus value was appropriated by the capitalist. The reason was that capital was in short supply, and labour-power was in excess supply. He believed that capital would grow more quickly than the supply of labour-power, so that profits would be competed away, and wages would rise. He was wrong.

Not, only did the supply of labour-power rise as the demand for it rose, but capital itself by introducing a longer working-day, by introducing new technologies that increase productivity, not only reduced the proportion of the working-day that was necessary to reproduce labour-power, but it also periodically resolves temporary shortages of labour-power, by creating a relative surplus population, by the introduction of these various labour-saving technologies.

But, some of the ideas of Ricardo and Marx in that regard have proved wrong too. Both tended to see the supply of labour power as rising as capital expanded, and as this caused wages to rise, which led workers to marry earlier, and have larger families. In fact, all experience shows that where living standards rise, the average size of families falls to around 2 children. Its poverty that causes people to have larger families, not larger families that cause poverty. That is all the more true today, with the ability to use family planning. Yet, the introduction of ever smarter machines, and robots shows that capital retains the ability to create large relative surplus populations, even where actual family size, and population is falling.

The problem, in part is that, control over capital remains monopolised, whilst the supply of labour-power is not. Trades Unions were developed to try to counterbalance that monopoly, but they always face an uphill battle, wherever competition between workers for employment intensifies. As Engels put it,

“The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market. Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”

Condition of The Working Class in England, Chapter 10. 

The real answer to this problem, as Marx set out in the Critique of the Gotha Programme, resides not in fighting for higher wages, but in the abolition of the wages system, for workers establishing their own democratic control over the means of production. But, in the immediate term, workers need to address the problem of their current need to have a decent standard of living.

One thing that Labour could do, and which does not necessarily require a Labour government, though it would facilitate it, is that Labour should work with the TUC, and with the Co-operative Movement to establish a Worker-Owned and Controlled Co-operative Labour Agency. It would be a means of workers gradually establishing a monopoly supplier of labour-power, to counteract the monopoly control over capital. The more workers signed up to such an agency, the more they could set minimum wage levels, minimum conditions of employment, and so on, refusing to supply labour to any employers unless such standards were met.

The Tories allowed all sorts of con artists to set up employment agencies, to which they gave various funds and subsidies. Labour should commit itself to encouraging the TUC and Co-operative Movement to establish such an agency to provide training, support, and to act as a monopoly supplier of labour to industry as a means of ensuring minimum standards, and in government should give it statutory backing, and the kind of funding and financial support that the Tories gave to get rich quick, merchants.

Labour spokespeople are frequently asked how they will pay for various of their projects. By raising wages substantially, this question will disappear. Not only will the burdens currently born by the taxpayer, i.e. by other workers, of paying all sorts of in work welfare benefits be lifted, and the cost be put where it should be, on the capital that extracts profits from the workers labour, but the various distortions in the market which that welfarism imposes will be removed to, facilitating a more rapid accumulation of capital, increase in employment, and further rise in wages.

Moreover, in order to lessen the monopoly power of capital in relation to labour, its necessary to act against the potential for capital to engage in strikes and lockouts. Part of the answer to that lies in ensuring that workers have minimum levels of income when not in employment, and also in measures of industrial democracy, to strengthen the position of workers. I will address those points in further posts.