Belfast Telegraph

Wednesday 7 October 2015

Northern Ireland's economy will pay price for low wages

By John McCallister

Published 03/04/2014

Northern Ireland's economy will pay price for low wages
Northern Ireland's economy will pay price for low wages

"The best possible welfare program is a job." So said Ronald Reagan. Across Left and Right, there would be little disagreement with the basic sentiment.

But what should alarm Left and Right is when work doesn't pay; when it ceases to be the "best possible welfare program".

The traditional answer from the Left is increased welfare spending. From the Right, we are traditionally told that low pay is a necessary working of the free market. Neither addresses the real issue: how to ensure work pays.

In Northern Ireland, we face a particular low-pay problem. One in six workers is among the low paid. We have the lowest levels of private sector pay of any UK region.

It would be easy to dismiss this as another "left-wing" social justice issue. It's not.

Low pay is a drag on our economy. It stifles growth. It increases welfare dependency.

Part of the answer is the Living Wage. The current National Minimum Wage is £6.31. The Living Wage is significantly higher – £7.65 per hour.

Businesses which have adopted the Living Wage speak enthusiastically about its benefits.

Yes, there is much else that needs to be done to build a prosperous, dynamic economy.

We need to look at the tax burden on firms, how regulation can be improved and streamlined, how energy prices can be made more competitive, how the workforce can be up-skilled.

What we can't do is simply wait for the challenge of low pay to somehow fix itself at some time in the future.

We in Northern Ireland have the highest levels of economic inactivity in the UK, some of the lowest productivity rates in the UK – and the lowest private sector pay in the UK.

We need to radically change this economic landscape.

London mayor Boris Johnson said the Living Wage is "good for London's productivity and growth". Productivity and growth – we need to see both boosted in our regional economy.

It's time for Northern Ireland to listen to Boris.

John McCallister MLA is deputy leader of NI21

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