Work doesn’t pay. Labour will fix that

There’s a fundamental problem with our economy. For too many people, work no longer pays. It is a scandal that 5 million working people are living in poverty. There is no clearer sign of a broken system.

People are worn out not just with their jobs, but financial stress. No one should have to lie awake at night worrying whether they’ll be able to feed their children. Having a warm, decent home and an occasional meal out should not be a luxury. Two-thirds of adults in poverty are in work. The proportion has been rising and has never been higher.

Both of us represent constituencies in the north of England. We have to refer working people to food banks and clothing exchanges. We have met teaching staff in Manchester and Leeds who go into school early to provide breakfast for pupils, often out of their own pockets. We can’t bear to see people being held back like this or to see potential being wasted in grinding poverty. We all deserve better.

But this isn’t just because of the cost of living crisis. It is a consequence of a low-wage crisis from more than a decade of squeezed pay under the Conservatives. Average pay, adjusted for inflation, was lower in May 2022 than in February 2008. We need lasting change to how work and workers are valued in our country.

We are proud that the last Labour government created the national minimum wage. We won the argument then, but we now need to go further to help restore dignity at work and make sure work pays. That is why the next Labour government will change the Low Pay Commission’s remit so that – alongside median wages and economic conditions – the minimum wage will for the first time reflect the need for working people’s pay to at least cover the cost of living. Finally, the national living wage will live up to its name.

Young adult workers are still getting a raw deal on pay. Their bills aren’t any cheaper, but they have to make ends meet with less. That’s just not fair. Labour will take steps to ensure our genuine national living wage applies to every adult worker and is properly enforced. We would also keep a link to median earnings so that all workers benefit from growth.

Related: Who pays the ‘real living wage’ in Britain – and who does not?

Many employers already pay a real living wage and that is to be commended. They should not be undercut by those who don’t, which is why we need a level playing field. Working people contribute so much to the wealth of our country. It is only right that they receive a fair day’s pay for a fair day’s work. But there is a wider economic case too. People’s disposable income is spent on products and services that provide a direct return to our economy and public finances, as well as helping our high streets thrive. When working people’s pay is squeezed, that removes spending power from the economy.

Poverty pay doesn’t just cause financial misery, it undermines many of the things that matter in life. Being compelled to accept every bit of overtime or take an extra part-time job to pay the bills comes at a cost to relationships and mental health. Worn-out parents with less time for family can be damaging for children growing up too.

There are couples who barely get to see each other because they are working extra hours to keep their family finances afloat. They are mentally and emotionally exhausted. That’s not sustainable and it’s not the standard of living we should tolerate in Britain.

Families are worried about how they will pay their bills, and instead of fixing the real issues, the Conservatives continue their infighting, offering no substantive ideas to help the British public meet the challenges they face. Labour’s plan to freeze the energy price cap would fix the problems immediately and for the future. It would mean people not paying a penny more on their energy bills this winter, saving the typical household £1,000.

But Labour’s plan for a stronger, more secure economy would ensure that economic growth raises average wages too. We know that the historically low rates of union membership and collective bargaining have been a brake on good work and fair pay across many sectors of the UK economy.

That is why in sectors such as social care, which have been overlooked and undervalued for so long, the next Labour government will roll out fair pay agreements that will empower unions and the workers they represent to negotiate better pay and conditions, going higher than the living wage and driving up standards across the economy. As well as improving workers’ lives, this is a vital step to deal with the recruitment and retention issues plaguing services such as care.

As we travel the country and meet people, it’s a world away from the imaginations of Rishi Sunak and Liz Truss, who would rather accuse working people of a lack of “graft” than take responsibility for Conservative failure. Those living in poverty often describe the feeling in the pit of their stomach, worrying about how ends will meet. That feeling is all too widespread on the streets of today’s Britain, with women and those from underrepresented backgrounds more likely to be consigned to poverty pay. Labour will ensure that working people are not just seen as collateral damage from an economy that is not working. While the Conservatives threaten the limited rights people already have, we will guarantee a real living wage and strengthen individual and collective rights for working people.

We were both teenagers when Labour won power back in 1997 but we cannot and will not forget the transformational impact the minimum wage had back then on so many, or the false arguments of those who conspired to block it. Now is the time to build on that achievement and take the next step. Labour knows that working people are the backbone of our economy and in government we will make work pay once again.

Angela Rayner is Labour’s deputy leader; Rachel Reeves is shadow chancellor

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