There are problems the minimum wage can't fix
20 June 2019
“That so many remain positive in the face of desperate circumstances is an enormous tribute to the human spirit. But Hartlepool has challenges that are beyond the LPC to meet and it is important for us all to recognise that labour market interventions on pay have their limits.”
These are the words of Simon Sapper, one of the commissioners of the Low Pay Commission (LPC) who visited the North East recently. He said that on almost every single one of the 100-plus measures in the NOMIS Labour Market Report, the town of Hartlepool lags behind the rest of the region and even further behind the rest of the country.
In March of this year the LPC began its annual regional visits to gather evidence for its recommendations regarding the National Living Wage (NLW) and National Minimum Wage (NMW) rates for those aged under 25.
After his visit to Hartlepool Simon Sapper wrote that it’s important to remember, always, that the remit of the LPC is to recommend increases in minimum pay rates that will not damage employment and that the point of these visits is not to judge or apportion blame, but to understand how the NMW and NLW feature in the planning and practice of work in the local economy.
He said that it isn’t a task you can approach on a soulless basis, and among many statistics about Hartlepool, the ones that stood out for him were:
- Nearly 30% of working age people were “inactive” – and of that percentage, more than 85% did not want a job
- Almost 30% of households are workless and more than 1 child in 4 is in such a household.
“What does this mean for the resilience of an economy or a society? Where will we find the reservoirs of hope in Hartlepool?”
Simon highlights a striking statistic: in the early 2000s, around 15,000 people (20% of Hartlepool’s population) were claiming one of the key social security benefits. The Enterprise Centre estimates that since then, they’ve brought in around £55m of employment-related investment, including a £30m EU grant.
Roll forward to 2019, and there are still 15,000 Hartlepudlians claiming a key benefit. This isn’t a sign of failure - the current 15,000 will not be the same people as before. That we know because the life expectancy in the town is so far adrift from national standards that demographics will have ensured it is the case. And that EU grant is putting 8,000 “neets” through college and setting them on a trajectory to employment.
“So the stat is really striking because, in spite of truly Herculean efforts by the people we met, the problem is not going away, or even diminishing…
…Issues about the development of the NLW, possible increases in the NMW, restructuring youth rates, and non-compliance don’t really get on the radar in this town. Poverty, to quote a local, draws in the horizon. People don’t look beyond today or further than their own town.”
Follow this link to read all of Simon’s words, in what is a very thought provoking article.