Miliband in vow to tackle low pay
A Labour government will ensure the minimum wage rises by more than average earnings, Ed Miliband said as he promised to tackle the "scandal" of low pay.
The Labour leader said higher wages rather than increased welfare spending is the best way to "pick up the pieces of an unfair and failing economy".
But business leaders warned against political interference in the work of the Low Pay Commission (LPC), which makes recommendations about the level of the minimum wage.
Mr Miliband's pledge follows the publication of a Labour- commissioned report by Alan Buckle, former deputy chairman of KPMG International, which contained proposals to overhaul the LPC.
In a speech in Walsall, Mr Miliband said it is a "scandal" that there are five million people in low paid employment.
"I think it is a basic principle, I think this is a principle that would command the support of the vast amount of the British people, if you do a hard day's work you should not be in poverty," he said.
"The next Labour Government will take new radical action against low pay. We will set a target for the next parliament about the level the minimum wage should reach by 2020.
"Under the next Labour government, the minimum wage will rise by more than average earnings in the economy as a whole.
"As part of a five-year ambition to restore the link between doing a hard day's work and building a decent life for your family."
He added: "For the first time we will say worke rs on the minimum wage will never be left behind, will never be left behind the rest of the economy."
The target would "represent a clear new mandate" for the LPC and "give businesses and others the chance to plan ahead".
"The route to a more equal society is through higher wages in work and not higher social security to pick up the pieces of an unfair and failing economy," he said.
"I don't believe there's a future for Britain competing on the basis of low pay with the sweatshops of the world.
"I think we've got to set greater ambitions and by doing that we send a message to the whole country about how we succeed in the years ahead.
"Higher productivity, higher skills, higher wages - that is the future for Britain, that is how we do better than this as a country."
The Buckle report also includes recommendations to strengthen the enforcement of the minimum wage and to encourage employers to pay the higher "living wage" - such as making it a condition of Government contracts - an idea to which Mr Miliband said he is "sympathetic".
But Katja Hall, chief policy director of the CBI, argued that the best way to boost earnings is by raising productivity, and called on the Government to improve school and vocational education and on businesses to offer more apprenticeships.
Ms Hall told BBC Radio 4's Today programme: "I think we need to recognise that the system we have at the moment has been really successful and that system involves the setting of the minimum wage by an independent Low Pay Commission.
"They have done a really good job and we think it's much better the job is left to them, rather than given to politicians."
Simon Walker, director general of the Institute of Directors, said: " Labour are right to push for workers to see the benefits of economic growth, but the minimum wage must not become the subject of a political competition to see who can offer the most, irrespective of what the economy and employers can afford.
"The Low Pay Commission has done a good job of balancing the rate against inflation, economic growth, productivity and the effect rises would have on small businesses and young people.
"In contrast, setting a target linked to average earnings risks seeming a little simplistic. While growth has returned to the economy, productivity remains stubbornly low. Any increase to the minimum wage must be timed carefully, and ultimately reducing the tax burden on both employers and employees will help strengthen the position of those in low-paid jobs."
But the policy was welcomed by union leaders, with Usdaw general secretary John Hannett saying: "W e are delighted that Ed Miliband has recognised the case for reform of the national minimum wage and that he is committed to keeping the Low Pay Commission and strengthening their role.
"This along with other policy commitments shows that Labour is the only party taking the cost of living crisis seriously and is prepared to tackle low pay."
TUC general secretary Frances O'Grady said: " Unions have long argued that many employers can easily pay more than the legal minimum. This report sets out how Government can act to help deliver higher wages in those sectors that can afford to.
"It's also right that Government uses the £138 billion it spends in the private sector to boost take-up of the living wage.
"Alan Buckle's report shows that fair pay goes hand in hand with running a successful economy. Labour should make this battle against low pay a top priority."