Urgent action is needed to raise living standards and help people progress into better jobs, the head of Britain’s largest employers’ group has said on a visit to the North East.
John Cridland, director general of the CBI, said the recovery was not being felt by many people in the North East because they were stuck in low paying jobs or saw much of their income taken up by housing and childcare costs.
A member of the Low Pay Commission that introduced the Minimum Wage in 1999, Mr Cridland spoke of his frustration that many of the very same people who were on the rate at the time were still being paid the lowest legal wage 15 years after its introduction.
He called on businesses to do more to help people progress to better jobs, which he said can be more difficult in the modern, more technically demanding workplace.
But he also praised businesses in the region, saying they were among the best in the country because “given what the North East has been through in the last 30 years, you’ve had to be excellent to survive.”
He said: “The big issue in the North East is living standards. That’s more of an issue here in the North East than in any other part of the country.
“I personally find it really frustrating that while the economy is growing well – 3% growth in GDP is a good result – lots of people in the North East aren’t feeling it because it’s not reaching them. We will only have a healthy economy if we tackle the debate about living standards.
“I was a member of the Low Pay Commission for 10 years, I was one of its founder members and I brought in the National Minimum Wage in 1999. I’m proud of that because a million workers got a 25% pay rise and nobody lost their jobs.
“But something that weakens that pride is that a third of the people that were on the minimum wage in 1999 are still on it 15 years later. They haven’t been able to find a way out of the minimum wage jobs.”
Mr Cridland said the gap between unskilled and semi-skilled jobs was now much higher because of the technological demands of modern industry. That made it harder for people to move up the career ladder and employers had to do more to help make people make that progression.
He also called on the next Government to help low paid workers by reducing their National Insurance contribution and introducing free childcare for parents in need.
“The lack of affordable childcare is the biggest single thing that keeps women in particular in low paid jobs,” he said.
Mr Cridland – who was in the North East to meet regional business leaders following visits to the SSI steel plant on Teesside and the fast-growing Vertu car dealer group in Gateshead – acknowledged that his demands would be difficult to meet in a time of continuing austerity.
But he said that whoever made up the next Government should act imaginatively to deliver better public services for less cost, rather than continuing to cut important facilities.
Mr Cridland’s comments will surprise many, coming from the head of an organisation that traditionally is seen as speaking for big business rather than rank-and-file workers.
They will also raise pressure on the Government to tackle cost-of-living issues, an area on which Labour has managed to successfully attack the Conservatives.
Neil Foster, Policy and Campaigns Officer for the Northern TUC, said: “John Cridland is right to highlight that living standards are an important part of determining the health of any economy and the key to this equation is wages.
“Average pay in the North East has fallen by ?25 a week in real terms since 2010 which reduces local spending, increases hardship, lowers taxes paid and risks greater personal debt. GDP figures alone won’t settle next quarter’s heating bill, put petrol in the tank or pay for a trolley load of shopping. The TUC wants to see pay you can live off, a strategy for decent jobs and a recognition of the role trade unions can play alongside employers and government in building a fairer recovery than at present.”