- Deputy Geoff Southern has been trying to introduce a living wage in Jersey for several years
- He says it will save the States money in reduced Income Support payments
- But a study by Social Security suggest that benefits handed out in Jersey are already too generous
- Is Jersey’s benefits system too generous? Take part in our poll below
A REPORT into setting a so-called living wage in Jersey may show that benefits handed out in the Island are ‘too generous’, the Chief Minister has said.
According to the UK Living Wage Commission it is an ‘hourly wage defined as the minimum amount of money needed to enjoy a basic, but socially acceptable standard of living’.
Living wages are not set or enforced by governments, rather employers can choose to register with living wage campaign groups and voluntarily agree to pay staff the rate calculated by that group.
It is worked out by assessing the basic cost of living and includes access to all available benefits, but there is no globally consistent way of calculating the wage.
In the recent investigation about creating a living wage in Jersey, the Social Security Department modified calculations used by London, Canada, America and New Zealand to see how different models could work in the Island.
The study, released on Wednesday, revealed that the minimum wage – currently £6.78 per hour – combined with available income support was enough to meet the requirements of a living wage policy.
It follows a call from Deputy Geoff Southern in 2013 for the government to conduct an investigation into having a living wage – an hourly minimum rate set higher than a minimum wage which enables people to enjoy a basic, but socially acceptable, standard of living.
A living wage is not compulsory in the UK – but is instead adopted on a voluntary basis by employers.
The report comes weeks after senior ministers announced that savings needed to be found through changes to the benefits system to help plug a predicted budget deficit.
During a briefing about the report Senator Gorst explained that some of the findings could indicate that the Island’s benefits are too generous.
When asked whether the report would mean a slashing of the benefits available to Islanders, Senator Gorst said: ‘We know we always want to review benefits to make sure people are looking for work and that work pays.
However, the report has been heavily criticised by Deputy Southern, who wants to see a living wage introduced in the Island.
He believes it would see huge sums saved by the States, with more Islanders requiring less in income support.
Deputy Southern also said it would lead to more job loyalty, lower staff turnover and a reduced need for training and retraining.
He said: ‘One thing that is very disappointing is the absence of any really meaningful impact assessment in terms of the economy and different sectors of the economy.
‘It seems to me that while the report is technical in nature, the drive behind it is actually quite negative in the sense that it does not give reasons why we could turn to a living wage. Rather it says why we should not turn to a living wage.’
Deputy Southern said he would now be getting a group together to review the work and consider what he called the ‘obstacles’ to a living wage outlined in the report, which was produced by a team from the Social Security Department.
Researchers considered a number of methods to calculate a Jersey living wage, following methods used in London, New Zealand and Vancouver.
In every model the Island’s minimum wage met the requirements for a living wage under the different calculations.
‘As Jersey’s existing minimum wage would satisfy the living wage requirement, there would be no savings to States expenditure (benefits and supplementation) or increase to States revenue (taxes),’ the report said.
‘Even if a higher living wage rate is introduced, the number of workers who would see an increase in wages is likely to be very small.’
Living wage schemes are voluntary and, so far there has been a low take-up amongst employers in sectors where wage rates are typically at or close to the minimum wage.
For example, the London living wage, which has been extensively promoted over the last few years, has increased wage rates for approximately 2% of low income workers.
There is no single agreed calculation for the living wage. Applying, as far as possible, the calculations used in London, UK outside London, New Zealand and Canada, the minimum wage rate already in use in Jersey (£6.78 from 1 April 2015) would satisfy the living wage requirement under three of the four schemes.
The group that will see the highest increase in income following the introduction of a living wage would be workers in Jersey who have been resident for less than five years and are not entitled to claim income support.
If a living wage is introduced in Jersey in a similar fashion to other jurisdictions such as the UK, the take-up amongst employers is likely to be low. Moreover, not all employers who would pay a living wage would have increased wage bills, as they already pay their staff higher wages (e.g., finance and public sector). As such, there will only be a small impact on States revenues, with minor increases in Social Security contributions and Income Tax and a similarly minor reduction in Income Support costs.
The results of the Household Spending and Income Survey due at the end of 2015 will give an up-to-date picture of the income levels amongst different household types in Jersey. These results will be carefully considered.
The report followed a proposition lodged by living wage campaigner Deputy Geoff Southern. In 2013 the States agreed to ask the Chief Minister to investigate the topic.
However, Deputy Southern said the report did not go into enough depth.
He said: ‘Although on the surface the report appears to be a neutral and technical document, it is in fact a highly political and skewed view, designed to put as many blocks as possible on the path to the adoption of a Jersey living wage.
‘In suggesting that Jersey already has a living wage and need do little more, the Chief Minister reneges on his promise to protect the poor and vulnerable. He governs by spin.’
Deputy Southern said the report:
- Ignored reducing in-work poverty and dependency on benefits.
- Ignored the living wages aim of lifting families out of relative low-income poverty.
- Ignored figures from a 2014 London living wage report that showed an hourly rate to meet basic living costs excluding benefits of between £11 and £15.84 for families with children and between £6.50 and £13.45 for those without, was needed.
- Ignored the fact that the 2014 London report said that to lift families above the poverty line would require hourly wage rates, excluding benefits, of between £11.60 and £15.84.[/breakout]
