The UK must set higher standards for low-paying jobs alongside a further increase in the minimum wage to match the protections afforded to workers by international peers, according to an influential think tank.
In a report published on Wednesday, Resolution said that although Britain had one of the highest minimum wages in the rich world, it lagged behind comparable economies in terms of quality work standards.
Among its proposals — which come as chancellor Jeremy Hunt seeks to increase the size of the workforce — include making sick pay more generous; Giving employees more certainty about their hours and shift patterns; offer early protection against unfair dismissal; and raised the minimum parental wage and minimum vacation benefits.
These reforms will increase the cost of labor, which could lead to higher consumer prices—particularly in sectors like hospitality and entertainment, which tend to hire people on lower incomes and sell to higher earners.
“Better jobs for some will mean higher prices for others,” said Nye Community, chief economist at Resolutions, adding that there is no need to panic if increases lead to shifts in production patterns. He noted the relative cheapness of hotels and restaurants in the United Kingdom compared to Europe, noting that their share of total consumption in the United Kingdom was therefore higher.
Community added that the reforms will not weaken the flexibility of the labor market because they will not have a significant impact on companies’ decision to hire and fire.
In its annual report on low-paying work, the foundation said the UK was on track to get rid of low hourly pay – defined as wages less than 60 per cent of the average – by mid-2020, and hasn’t suffered a significant loss so far. of jobs as a result.
But the country has one of the least generous systems of statutory sick pay in the rich world. Resolution said the mandatory sickness benefit for a private sector worker in the UK after an absence of four weeks was worth just 11 percent of average earnings, compared to the OECD average of 64 percent.
The UK’s statutory maternity wage is also well below the OECD average, and in 2011 the government extended from one to two years the period female employees must work in a new job before qualifying for protection against unfair dismissal. This lack of protection mainly affects low earners: more than five in 10 people earning less than £20,000 expect to receive only the statutory minimum if they fall ill, compared to one in 10 people earning more than £50,000, according to the report. .
Higher earners are also more likely to benefit from employer maternity pay plans, which are far more generous than the statutory minimum.
The think tank warned that if employers look for ways to cut costs in order to accommodate future increases in the minimum wage, those standards risk falling further. He also argued that the government should expand the powers of the independent Low Wage Commission, which advises ministers on minimum wage policy, to consider raising wages alongside other employment criteria.
A Department for Work and Pensions spokesperson said the government was “committed to ensuring work pays off and further improving workers’ rights” and was therefore backing six member bills to advance workers’ rights.
The government last year shelved plans to introduce its own employment bill.