Miliband proposals will do nothing for the most vulnerable

Political interference in wage setting should be avoided

Commenting on Ed Miliband’s calls to set a higher minimum wage linked to average earnings, Mark Littlewood, Director General at the Institute of Economic Affairs, said:

“Political interference in wage setting is the wrong solution to poverty. The minimum wage is not a well-targeted measure - nearly half of those individuals in households defined as in poverty are workless. Miliband’s proposals will damage the job prospects of the young, unskilled and those in low productivity regions. A higher minimum wage will do nothing to help the most vulnerable.”

“These proposals would significantly undermine the ability of the Low Pay Commission to consider the capacity of businesses to pay a minimum wage and the wider economic environment.

“The minimum wage was  introduced to eliminate exploitative pay at the bottom end of the jobs market, taking into account the prospect that minimum wages set too high would lead to fewer job opportunities. Ed Miliband’s calls today fly in the face of this principle. He would convert the Low Pay Commission into a campaign to reduce inequality rather than an expert body on pay and conditions.”

Notes to Editors: 

In April 2014, the IEA published The Minimum Wage: silver bullet or poisoned chalice?

To arrange an interview please contact Stephanie Lis, Head of Communications: 0207 799 8900/ 07766 221 268.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
 



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