More than 3,000 Caerphilly County Borough Council workers are to get a pay rise to earn at least £7.20 an hour – costing taxpayers an extra £500,000 a year.
Labour councillors, who run the local authority, have brought forward the plan to introduce a ‘living wage‘ as it was part of its election manifesto in May.
Cllr Keith Reynolds, deputy leader and cabinet member responsible for resources, said: “I have asked for this report to be brought forward immediately to ensure we make good on our election promises and pay our employees a minimum of £7.20 an hour.”
The pay rise – coming into effect in October – will cost £252,000 this financial year and an extra £504,000 each year after.
The council has said it will pay for the increase in wages through savings already made.
According to council papers, the £504,000 will be funded as follows:
£228k virement from Public Services recurring under spends.
£120k from recurring under spends in respect of School Transport.
£156k from 1% uplift (pledge) set aside for Social Services and Schools.
Cllr Reynolds added: “The majority of the workforce likely to benefit from this move, are women working in our schools, social services and public service areas who are currently being paid a minimum wage of £6.38 an hour, making this move will bring them into line with big private sector employers, including Barclays Bank and accountants KPMG, who are also signed up to paying it.”
The move has been welcomed by Labour MP Wayne David and follows the Labour Welsh Government’s commitment to encourage employers to introduce a £7.20 ‘living wage’.
The ‘living wage’ is a concept calculated on the cost of basic living.
Mr David said: “This is excellent news. It shows that this Labour-led Council is on the side of ordinary people. This move is in sharp contrast to the attitude of Plaid Cymru who ran the Council until May of this year.”
Cllr Colin Mann, Plaid Cymru’s leader on Caerphilly County Borough Council, also welcomed the move but questioned the finances.
He said: “I do not have full details of the proposals at present but I certainly welcome the principle of paying all workers a living wage, whether they are employees of the public or private sectors.
“The issue that will need to be addressed is the affordability of spending an additional £500k per annum on this proposal when the authority is facing the prospect of ever-shrinking resources. It is extremely important to protect front-line services and I would want assurances that this will be done.
“The situation in Social Services is particularly problematic with the huge predicted rise in numbers of the elderly and the extra demand for services. The Plaid administration put extra money into this year’s budget and looked to continue this in future years to address the issue of increasing numbers.”
Cllr James Fussell, deputy Plaid leader and spokesperson for human resources, said: “What should be enshrined into the ‘living wage’ is to pay a fixed percentage above Minimum Wage so that the difference is not eroded by factors in future years.
“We also need to bear in mind the plight of our young people and guarantee opportunities of the sort that Plaid started with the very successful training and apprenticeship scheme.”
Update, August 1, 2012
On Tuesday July 31, Caerphilly Council’s cabinet agreed to implement the pay rise. The decision will go to full council for final approval – effectively a formality given Labour’s majority on the council.
Following the cabinet meeting, Cllr Harry Andrews, leader of the council said: “This is a historic decision which fits in with our vision to tackle poverty and improve living standards for our lowest paid employees. We want to ensure that none of our workforce earn below the minimum wage and this move would show we are making a stand for the 3,000+ employees on low wages, the majority of whom are female, frontline staff.
“This is one of the most significant decisions that we are likely to take and I hope there will be overwhelming support when the issue is considered at Full Council in the near future.”
A rise from £6.38 per hour to £7.20 would seem very welcome to the low paid. The reality is that many will not benefit as intended, these are the people who claim working tax credit to supplement a meagre income.
The rise, which would be £0.82 per hour, results in a reduction of working tax credit of 39%in the pound, or £0.32 per hour, leaving many with a £0.50 net rise. This rise would also, dependent on each case, be liable for income tax and national insurance deductions. This further erodes the pay rise.
This outcome can be blamed on the extemely complicated tax and benefit system adopted by sucessive governments. The answer to this dilemma faced by the low paid is for the political parties to campaign to remove the low paid from income tax and NI altogether This could be achieved by a dramatic rise in individual tax allowances and the scrapping of National Inurance for all. Many of the low paid work seasonally or on short term contracts. When they find themselves temporarily out of work they can reclaim tax already paid for that tax year but their NI contributions are not recoverable.
The whole tax and benefit system is too complicated, understood by only a few accountants whom the low paid do not usually have the luxury of employing. Unfortuately I expect the current system to sail majestically onward, with those workers at the bottom paying more than their fair share of the nation's income.
Tax credits ensured dependency upon welfare and government favour. They are a barrier to opportunity and discourage self-improvement. They should be scrapped and tax thresholds raised. Allow the low paid to keep their own earned money rather than enforcing dependency upon handouts.
There is one problem with Helen's solution to the problem of the low paid. Many people, who work a 35 hour week on the minimum wage, often working at night and at weekends, are entitled to working tax credits. I have no doubt that all these workers would love to improve their financial position by earning more for their, hard earned, pay.
Taking away the modest help they receive from working tax credits seems to me to be cruel and counter productive. As an example an adult warehouse worker who presents themselves for work at 03-00 Hrs every morning and works an 8 hour day, 5 days a week earns £12,646 per annum gross to support their household. From this they also pay their income tax and National insurance. They are currently allowed some working tax credit to augment this meagre income.
We could scrap WTC but what sort of incentive is this to those who clean our streets, prepare and serve our food, stock our supermarket shelves and perform dozens of other tasks that make life more pleasant for the more fortunate in society?
These workers are not members of a dependency culture but work hard for a low wage to pay their rent and sky high fuel costs, (the latter artificially inflated by the government's tax grab on all types of fuel). They are not work shy, perform essential tasks and are working hard to support themselves. Personally I take my hat off in grateful recognition to the low paid workers of this nation; they need all the help they can get.