The Social Mobility and Child Poverty Commission has called on the government to develop a low wage strategy to raise the bottom rungs on the UK pay ladder.
In its report, Social mobility: the next steps, the government-appointed commission recommends that the government:
- Mandate the Low Pay Commission to set out affordable wage benchmarks for different sectors in the economy.
- Encourage employers that can afford to pay the living wage on a voluntary basis.
- Pay the living wage more widely in the public sector, since there are savings to be made on tax credits.
- Introduce a requirement that listed firms and the public sector publish the number of staff earning below relevant pay benchmarks.
The commission has also recommended that the government use the Social Mobility Business Compact to explore with employers the business benefits of promoting and developing low-paid staff, supporting childcare and helping employees reduce costs, for example, by enabling collective purchasing of mobile phones or advice on bills.
The report said: “Stagnating low wages threaten living standards and burden the taxpayer.
“In the recent past, tax credits have bridged the gap between low pay and a living wage.
“The squeeze on public spending, including tax credits, means it is no longer possible for taxpayers alone to make up the difference. Employers need to step up to the plate and share some of the heavy lifting alongside taxpayers.
“The government should look carefully at what more can be done to increase pay among low income earners without damaging employment.”