Thread by @KidTempo

There is effectively no difference between a minimum wage and minimum living wage. A minimum wage which is too low to live off is simply too low - the minimum should be equal or higher to the living wage.

https://twitter.com/PoliticsLostjr/status/1164125188272861184

The problem is how (or more likely who) to determine the minimum wage? Centrally by the EU? or nationally by the member states? (or, I would argue, regionally?). I'm afraid that until all EU states start reaching something like economic parity, the answer is to do it nationally.

The EU does not have the structures (let alone the treaty mandate) in place to be able to not only investigate cost of living in each nation and region, but also determine how wages, taxes, and public services, etc. interact to determine what the optimal minimum wage should be.

A nation's government, on the other hand, controls many of the levers of power that can affect what the cost of living actually is - taxation, cost of public and private transportation, housing, education, food, etc. It's therefore better placed to set a minimum wage accordingly.

As to whether it does so... Well, that's obviously not happening in the UK. Or in many other member states for that matter.

The EU /could/ have stricter rules to force member states to set *realistic* minimum wages, but then it would have to get involved in how the cost of living AND how minimum wage is calculated (and can the same method be applied to all member states?).

It should not be underestimated how ferociously complicated this is. There are so many factors that are involved - not only direct costs, but average working hours/days, transportation, childcare, taxation, accommodation, family size, regional differences, etc.

I would suspect that even the governments who do set a suitable minimum are not doing it according to a precise formula. More than likely they at some point set a generous rate and then adjusted upwards ahead of there being a need to do so (as opposed to several years too late).

There's also the complication of there being great regional differences in what a minimum wage should be. The cost of living in London is very different from in Manchester or in Glasgow *and for different reasons*. Costs in rural areas will again be different.

Not only that, but imposing a higher minimum wage could make regions uncompetitive - increasing unemployment and having a negative rather than a positive effect (not that I subscribe to this as an excuse when most governments use it).

In these regions there could be a greater net benefit from alternative methods such as expanded/cheaper/free public transportation, greater access to affordable or free childcare, rent controls, more and cheaper social housing, etc.

i.e. Driving down the cost of living could have a greater direct benefit than raising the minimum wage. Because it is regional, it's less likely to drive inflation which would soon cancel out the increased wage.

(To be clear, you'd expect the regional minimum wage to slowly rise to meet its counterparts in other regions - but that would be over years rather than over months. The aim is to balance the cost of living in each region so that eventually the minimum wage is equal nationwide)

(Also, the same principle applies across EU member states - the aim is to eventually so that each region in each nation in the EU has roughly the same wages for each job...)

(... with the cost of living having been adjusted so that people working in London have the same income & disposable income as in rural Romania. Obviously that's a few decades away and it's a target that may never be reached, but it's a worthy direction of travel)

So anyway, the way that the EU works is it makes decisions at a high level, expects the national member state governments to implement the decision using legislation, and then delegate down to the regions and/or cities as appropriate.

This is called subsidiarity - and the UK does this very badly.

The UK is reluctant to delegate any *real* decision making powers down to its regions (whether it's devolved assemblies, the mayoral cities, or to local councils).

What it *is* eager to do is impose its decisions and expect the councils to work out how to pay for implementation.

For example, UKGov decides what the provisions for social care, mental health, etc. should be, but the funding and running has been delegated to councils (who have to find a way to pay for it out of council taxes and business rates).

When it comes to the minimum wage, UKGov retains the power to make any changes. There are literally no powers at a regional or local level to make and changes or adjustments.

It's also impossible (or at least very difficult) for something like a council to make alternative changes (e.g. subsidising public transport) because the only way it can afford to do so is by raising council taxes and/or business rates.

Literally anything substantial must be decided and funded further up the chain i.e. the Assemblies or UKGov - who will then take control, half-arse it, go over budget, and probably leave the council/region to deal with the debt and/or a horrible PFI contract.

Probably the best, most effective projects have been where a council/region has applied for EU cash so they can implement a project while retaining control. Projects that can drive the cost of living (albeit slowly) without changing the minimum wage (which they don't control)

So I've strayed a little off topic (as I am prone to do) but the point I am trying to make is that setting an appropriate minimum wage (or a minimum living wage, if you must) is and cannot be the EU's responsibility.

It could - at best - set a directive that member states should set minimal wages appropriate to the region or locality, but I think it would need a treaty change to be able to enforce it is set appropriately (probably) or to be able able to set it itself (almost certainly).

*is not and cannot be

The problem isn't the EU, it's the UK (and likewise in some other member states). The problem is with the concentration of power in Westminster and Whitehall. As long as the skewed version of subsidiarity is in place (i.e. not subsidiarity) these problems and others will persist.

Unfortunately, I don't think a Labour government will fix the problem either. They probably will raise the minimum wage to whatever a living wage should be. They may even put in regional variations (though I doubt they will do it with the subtlety required).

I think that while a decent bump in the minimum wage is overdue, this will only defer the problem rather than solve it. Inflation will drive prices to catch up, which will soon require another bump in the minimum wage, and so the cycle continues.

Increasing the minimum wage may have a negative effect on businesses that are right on the edge. Enforcing a raise of a couple of pounds an hour if margins are so tight that it leads to redundancies doesn't help anyone (though I think this is an overblown problem)

A Labour government may implement infrastructure projects and subsidised services that will reduce the cost of living. They may increase funding to the NHS and to councils to help fund those services. This of course would be a good thing - if done well.

As I have said regional needs vary and just throwing money at the problem may only be a temporary solution. It also risks the scourge that dragged down the last Labour government - incredible amounts of money being wasted on senior and middle management running huge bureaucracies

Back in the later Blair/Brown years there was an incredible duplication of effort between Whitehall and Quango's, many of whom may or may not have done good work, but burned through money at a fantastic rate.

I shudder to think what will happen if Labour tries to turn the UK back to its union-led councils from the 70's. If it tries, it may as well resign itself to losing its next election. Union leaders do not necessarily make good managers - they didn't then, and they don't now.

What I don't believe Labour will do, at least not under Corbyn, is restructure the UK so that power devolves according to the principles of subsidiarity - where UKGov devolves decision making & funding to the appropriate level, and then provides approval, monitoring and oversight

To me, this doesn't seem to be in Labour's nature (again, not under Corbyn). I expect that it sees a return to the command and control economies where all power is centralised and under their direct control. There is a big difference between "state owned" and "state run".

This is not to say I approve of the Tory's "privatise everything, let the market decide (while the rich get richer)" ideology either. Their version (i.e. right now) is that they control everything, fund as little as possible, and sell off what they can. It's just not working.

My hope is that we have a series of hung parliaments where minor parties can use their influence to devolve power from central government down to a regional or local level.

Once the public get used to governments where the parties work together (or should I say when the MPs get used to working together rather than in opposition), they should become more open to replacing the hated FPTP system with some form of proportional representation.

As the 5th richest nation in the world there is no reason why there should be such wealth disparity and income inequality. We should be able to fund our health services, our schools, and for the public to be well paid and enjoy their leisure (and retirement) time comfortably.

Blunt tools may be useful in knocking some heads and making short-lived changes, but to avoid them being reverted at a next election then real, lasting change will have to come in the form of how the UK is governed, not just by *whom*.