David Cameron has said today that Britain needs to move to
a “higher wage, lower tax, lower welfare society” yet, in reality this is just
political bunkum!
To achieve a higher wage society requires an interventionist
government prepared to spend extensively and legislate to reduce corporate profitability,
both things being the antithesis of Tory Party ideology.
For example, care work is a notoriously low paid job. To
make care work a higher paid job it would require the public sector to invest a
huge amount of money to pay care companies in order to improve wages. This in
turn would significantly raise the cost of social care, potentially requiring
some form of increased taxation to pay for it.
Yet even if the Government were to increase the amount of
money it paid to social care providers there is no immediate guarantee that the
money would translate into higher wages for workers. The majority of care
providers (around 80%) are in the private sector where profitability is
important (after all why would anyone run a business unless they made some form
of profit), so to ensure higher wages for the low paid staff there would need
to be legislation to ensure that private companies use the extra monies for
wages otherwise it could simply be taken as profit.
In general private sector businesses higher wages would
have to be met by either reduced profitability or increased prices for
consumers, and I think it would be fairly predictable that the latter would
happen. In which instance higher wages would be simply and easily wiped out by
increased the increased costs that everyone would have to pay. Again, the only
way to prevent this would be Government intervention and, again, the antithesis
of Conservatism.
The other issue to consider is that higher wages could also
impact on employment, paying higher wages may force companies to employ less
people, which, in turn leads to higher unemployment and, therefore, higher
welfare!
David Cameron’s political bunkum is obviously designed to
appeal to someone but who exactly is a mystery. Anyone with any sense would see
that a higher wage society would need serious Government change and be near
impossible to achieve under conditions of austerity. Business leaders in the
City are probably cringing at the thought of giving their workers more money
and losing profits because of that.
Obviously we know MP’s themselves are leading the way in
the higher wages stakes but if they truly want the rest of us to earn higher
wages then they need to show real commitment to it rather than coming out with
unrealistic rhetoric that nobody really believes anyway.
