Minimum Wage: revised hourly rate from 1st April 2010 (P.14-2010) – amendment.

STATES OF JERSEY

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MINIMUM WAGE: REVISED HOURLY RATE FROM 1ST APRIL 2010 (P.14-2010)

– AMENDMENT

Lodged au Greffe on 11th February 2010

by Deputy T.M. Pitman of St. Helier

STATES GREFFE

2010   Price code: B  P.14 Amd.

MINIMUM WAGE: REVISED HOURLY RATE FROM 1ST APRIL 2010 (P.14/2010): AMENDMENT

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For the figure of "£6.28" substitute the figure "£6.36". DEPUTY T.M. PITMAN OF ST. HELIER

REPORT

As States Members will appreciate it is hardly surprising that I agree whole-heartedly with the contention outlined within the proposition of my JDA colleague, Deputy Geoff   Southern  that  the  2010  increase  to  the  Minimum  Wage  proposed  by  the Minister for Social Security does not go quite as far as it should. Where Deputy Southern and I disagree is simply upon the extent of that increase. The Deputy sets his proposal at a rate of £6.28; or 40.5% of weekly average earnings.

I am proposing that the rate should in fact be based on 41% of weekly average earnings  i.e.  a  new  Minimum  Wage  hourly  rate  of  £6.36.  This  would  take  us precisely to the 2010 position targeted by the Employment Forum some 2 years ago within a framework of aiming for gradual incremental increases of .5%.

It should be noted here that both the original proposition from the Minister for Social Security and that of Deputy Southern already provide excellent background material; drawing  at  length  on  data  provided  by  the  work  of  the  Employment  Forum.  In particular  I  would  draw  Members'  attention  to  the  graph  contained  in   Deputy Southern 's proposition outlining percentages within individual business sectors. Given this material I obviously have no wish to duplicate any information – other than that which  I  deem  to  be  absolutely  essential  for  the  purpose  of  understanding  the justification for the proposition – so will keep my observations as brief as is practical.

The principle underlying a rate set at 41%

As   Deputy   Southern  highlights  within  his  proposition,  in  2007,  the  Employment Forum, in making its recommendations for the minimum wage and in looking to the future advocated a figure of 40% of average weekly earnings following comparisons with minimum wage rates of a number of other countries. These are set out in the table below. Here I would draw Members' particular attention to the average figure based on all of the countries utilised for comparison highlighted in yellow – 41.14%.

Minimum wages as a percentage of average wage in other jurisdictions

An amendment that simply brings us to the point where we should now be

Though the average percentage figure indicated in the comparison chart above is compelling  in  itself;  in  his  proposition   Deputy   Southern  reminds  us  how  the Employment Forum emphasised the fact that if government wished to raise the bottom end of earnings the minimum wage must equate to more than 40% of the average wage in future. As already highlighted, the ideal being stated that the Employment Forum would strive to gradually increase the percentage of the average wage used in the formula towards 45% in the future.

Though I personally believe that in Jersey we should actually be aiming, long-term, to ultimately reach a figure of 50%; with regard to the proposed figure for 2010 we need to  bear  in  mind  that  the  Employment  Forum  unanimously  agreed  to  show  a commitment to very gradually increase the minimum wage above 40% of weekly average earnings (half a percent for 2009). Significantly:

The 2009 figure was set at 40.5% of average earnings

Viewed within this context it is my belief that 2010 should therefore have seen us naturally  implement  a  rate  of  41%.  However,  as   Deputy   Southern  highlights,  in targeting the minimum wage rate for 2010 the Employment Forum has taken both a backward  step  from  its  own  established  benchmark  figure  of  40.5%;  and  also abandoned its previously stated aim of incrementally raising over time the relative value of Jersey's minimum wage.

The consequence – particularly viewed in the light of significant recent hikes in electricity and domestic fuel costs, the impact of GST etc. – is that the position of those at the very bottom of the pay ladder have not been protected. Indeed, it will essentially  have  been  worsened  and  at  the  very  time  such  employees  need governmental resolution the most!

Of  course,  though  it  must  be  acknowledged  that  the  Forum  does  offer  limited comment in attempting to justify this retreat, to the effect that they felt the need for caution given the economic downturn, the fact is that an equally compelling case can be made for adhering to the Forum's earlier position.

After all, as we stand in spring 2010 pay awards for the year relating to a number of major pay groups are still being negotiated. Both private and public sectors will now be looking to the future based on fairness and sustainability. We can be quite certain that this proposed incremental increase to 41% with regard to the minimum wage will not be out of step when these awards are finalised. I would also draw Members' attention to the fact that the Minister's proposed rate of just £6.20 is, to the surprise of many I have spoken to, actually even set at below the RPI (X). Please see the table below.

We must ensure a living wage' is available to all

Considering all of the above I feel that I must conclude with an observation arising from a public seminar I attended late last year relating to the North Town Master Plan. The incident really emphasizes the need for us to keep our sight fixed firmly on reality. At the seminar, like a number of other people present, I was shocked to hear the owner of a St. Helier business complain bitterly about how the States really should be LOWERING the minimum wage if politicians wished to help businesses like his thrive.

Indeed, the gentleman went on to state quite specifically that if we (the States) would only allow him to pay people £3.00 an hour his business and many others would be so much more profitable. Why do I mention this now? Only because I feel – like so many of my constituents working in this bracket who find it necessary to approach me for help – that there are far too many people in Jersey who, perhaps because they have never had the misfortune to find themselves there, have no real conception at all of how difficult it is to make ends meet on Jersey's present minimum wage.

As I believe most Members will be all too aware, a great many people at the lowest end of the earnings market work very hard indeed. There reward – a reward that we as the island's government should ensure with vigour and courage given the reality of our highly expensive island – is a rate of minimum pay that is not an existence' wage but a living' wage. Setting that rate at £6.36 will do just that. Though an increase form the Minister's proposed £6.20 per hour of 16 pence may seem, at first glance, a big difference let us keep this is perspective: set against an assumed working week of 40 hours this actually breaks down at an increased salary of just £6.40 per week.

Financial and manpower implications

I believe that there are no direct financial or manpower implications for the States.