Tom Harris, Compass and the need to focus on low pay, not high

After due reflection I won’t be signing my name in support of the Compass-led campaign for a High Pay Commission, unless intelligent comments on this post convince me to.  And I call that very open-minded.

I don’t imagine that the non-signing of a left-leaning leader of a Labour opposition group, in a place few people not from here can pinpoint on a map, is going to have Compass and colleagues quaking in their boots in realisation that they have made the biggest political misjudgment of their worthy careers. 

But this is my blog and I’m going to explain why I’ve decided not to sign.

But first, a Tom Harris MP interlude…….

Tom MP has been feeding his trolls this morning with tasty morsels.  He’s been attacking with gusto the High Pay Commission campaign, arguing as loud as he can batter his keyboard that ‘New Labour’s appeal was based on an explicit acknowledgement that success, ambition and the pursuit of wealth are all Good Things’, and that by sticking with this mantra will help Labour win the election.

That’s an ‘interesting’, though not unexpected perspective, given his previous posts on the matter.

He’s also been developing an intersesting discursive technique in recent posts, whereby he anticipates leftwing comments back to his post and in so doing creates a further surge of venom and foam-frothing from his trolls, even in the absence of ay such comments from lefties, many of whom have given up commenting on his posts in the knowledge that such commenting is now pointless, in the same way that leftwing commenting over at his mate Iain Dale’s place is utterly pointless. 

Thus, in the post in question, he projects the reponse: ‘Undoubtedly, there are already those typing in the comments box to the effect that, since the government already own the banks, it has the right to intervene to limit financial rewards of those still running them.’

A clever technique, I acknowledge, if troll-feeding is your bag, though Tom’s confidence that he’s already one step ahead of his commenters does smack a little of arrogance.

But for me, the most interesting and commentworthy part of his post (thereby proving he’s not one step ahead of me!) is his view low pay has now been sorted and really in no need of further comment:

‘The NMW was as much a New Labour as an Old Labour achievement because it levelled people up. It was exacly the opposite of class warfare, which is why there is now a consensus between the two parties that it should remain regardless of who forms the next government.’

It is interesting, in fact, because it closely mirrors the low pay comparison bit of the Compass statement itself:

‘In 1997 a ‘Low Pay Commission’ was set up to advise on the implementation of the Minimum Wage – a policy which has ensured greater fairness and economic stability.’

Unfortunately both rightwing Labour and Centre-Left Labour are relying on assumptions about the impact of the national minimum wage (NMW) on ‘fairness’ or ‘levelling up’.

Both, I have suggested in probably-not-to-be-read comments at their places, could do with reading most recent (March 2009) report for the Low Pay Commission conducted by Income Data Services, which has some facts about the impact of the NMW.

The report makes for worrying reading for those (and Tom talks of cross-party support) who support the continuation of the NMW as the key way to ensure income ‘fairness’ and ‘levelling up’ (and I acknowledge here that I was fully in support of the NMW when it was introduced in 1998, and that it did indeed ‘level up’ initially).

Space and time today does not permit a full analysis of the report, which has some very interesting industry sector comparison data to which I’ll return in a later post (about supermarkets), and which is written, deliberately drily, from the perspective of a research consultancy aware that its contractor is the Low Pay Commission, which has a vested organisational interest in the continuation of the NMW and its role in determining its levels.

However, two points made in the report stand out.  First, there is the finding that ‘Half of the 202 organisations in the low-paying sectors surveyed for this report had to raise rates to comply with the October 2007 National Minimum Wage (NMW).’

While this finding is written up in a way which seeks to reassure the reader that the NMW is doing its job, forcing half the companies to come up with the readies, the other – I contend much more valid -interpretation is that wages are now pinned by companies across all sectors to the NMW, and in effect this is the benchmark for what they can get away with.

Certainly, this fits with my own experience, where companies’ decision-making goes along the lines of a) what is the NMW? b) how can we add a few pence to make ourselves like a good employer and compete for good staff in the labour market; and now sometimes/often/always ignores the questions of c) what can we afford to pay? d)  what are our employees entitled to, and what do they need to live on e) how are their unions putting their case and with what backing?

It is worth remembering also that this finding – that 50% of companies are below the previous year’s minimum wage when they need to comply – reflects data from companies who were willing to provide it.  What of the rest?

And this intuition – that the NMW is now holding down wages rather than pushing them up – is justified by the other key finding that I’ll pull out of the report:

‘The median pay settlement in low-paying sector was 3 per cent in the year to September 2008. This compares to 3.8 per cent in the rest of the economy, indicating that settlements were typically lower in the low-paying sectors.’

So the NMW is now, apparently, helping to drive down wages of the lowest paid not just relative to the ‘fat cats’, but also to those only slightly higher up the income ladder.

As if that’s not enough evidence, there’s also the ample media coverage of  the way companies who want to have now adapted to the NMW by taking tips, accommodation and other costs into account, and making that part of the total.

In the end, then, it’s the unhappy realisation that the NMW legislation of 1998 – well intended and temporarily beneficial as it was – is now part of the problem which makes me wary of this new approach to curbing high pay.

First, I simply think it’s the wrong target for Compass’s energies and resources, and that Compass would be much better off investing in support for Living Wage campaigns of the type successfully waged in London in 1996 at London University, and more broadly in support of trade union pressure around driving wages up, irrespective of the the NMW, as high as they can.

The Compass approach is simply too ‘Fabian’ in that it seeks to draw together a commission of the high and the mighty which will persuade the government of the day that it’s morally correct to do whatever it can do to restrict high pay. 

Such an approach ignores the fairly obvious point that the government, of any colour, won’t do that, and that the battle might look good now but it will be lost.  Indeed, the Chancellor has already said so: ‘Generally, I think that pay agreements ought to be reached by employers and employees meeting together’, conveniently ignoring that fact that the NMW and the Low Pay Commission militate against just such union/employer engagement.

More broadly, the Compass campaign sets to one side, in favour of a campaign for a new tranche of legislation brought forward by the powers-that-remain, the most effective way to curb high pay amongst those who run the capitalist system.  That’s for labour (with a small ‘l’ this time) to demand its fair shareof the profit, in the way labour is best at demanding it – not through the good offices of a Commission, but through collective action.  Compass, if it really wants to help, might want to think about a campaign for the repeal of the 1980’s laws which hinder the effectiveness of this approach.

And that 1360 words’ worth, dear reader, is why I won’t be using the two words of my name to support Compass this time around.