The class ceiling

Malcolm hears the CBI's fretting about the minimum wage. Heaven help us: it's going up to £5.35 an hour next week! Begging to be let off the hook of future increases,

the CBI said that the minimum wage would have risen by 27% since 2002 - faster than average wage growth of 18%.

Rising energy costs, lower 2007 growth forecasts and the cost of employment regulation meant firms could not cope with further heavy minimum wage rises, it added.

Malcolm notices one illogicality there: the cost of heating, cooking and lighting do not impact on the lower wage-earners, only on business.

The rest of the CBI's statement scarcely transcends this level of self-serving special-pleading. Their bleats include:

1. lower-waged competition overseas;
2. being undercut by a minority of unscrupulous employers who take workers on the black market to avoid paying the minimum wage; and
3. uncertain global economic outlook.

Ho hum. Let's take those one at a time.
1. Most of the low-paid jobs are in service industries (retail, catering and cleaning, for example). Nice to see how they could be outsourced to the Philippines.
2. The CBI is the UK's leading business organisation, speaking for some 240,00 businesses that together employ around a third of the private sector workforce.
If its members are so omnipresent, they must know who is doing the dirty. So, why does the CBI not shop the rogue employers?
3. The CBI does not read its own research. A week ago, the CBI demolished its own thesis about uncertain global economic outlook with a news-release:

GDP growth is expected to return to a near-trend 2.5 per cent rate next year, as world economic growth slows and the impact of higher interest rates takes effect. Consequently, inflation is projected to ease back over the course of 2007, following an above-target peak this winter caused by rising food and energy costs.

Malcolm, as usual, has a pragmatic suggestion: let's index-link the minimum wage to something with which the CBI definitely agrees. Say, board-room pay and bonuses. Sorry, there's an error in that: the boardroom do not endure anything as menial as "pay" -- it is "executive compensation". And here's Income Data Services on just that topic:

Top pay in the FTSE 100 reached a landmark this year with the average total earnings of lead executives breaching the £2 million ceiling. Never in the 15 years since we started monitoring directors’ remuneration have we found so many earning so much. Based on data drawn from our wider FTSE 350 survey, the Directors’ Pay Report 2005, we found that more than eight out of ten FTSE 100 lead executives earned over £1 million, with eight of these receiving total packages grossing more than £4 million.

The Labour Research Department is nothing like as sensationalist as that:

Chief executives of FTSE 100 companies received an average 10.8% pay rise last year - twice the rate of increase in average earnings for the whole economy.

And 10.8% on £5.35 takes the minimum wage to about £5.93: which is a bit better than the 25p added this year. Sphere: Related Content