Most rich, western, first-world countries have millions of ‘working poor’. These are people whose jobs do not pay enough to keep them above the poverty line, and whose wages are then topped-up by the state. In the UK we call this tax credits.
The minimum wage has never been high enough to reach the bottom of a ‘living income’ though. Therefore people still need government benefits. In 2008, about 5.5 million working families in the UK received tax credits, including working and child credits, housing benefits, and local tax benefits. The Tories austerity policies have reduced this number to 4.3 million. Given that there were 11.4 million working households in the UK in 2012, this means that an astonishing 38% did not receive a ‘living wage’.
Former Chancellor of the Exchequer George Osborne was cutting £12 billion from the welfare bill over the next four years as part of his screw-the-poor plan. Of this, £9 billion will come from cutting the tax subsidies for working families.
Mmm? Won’t this make things worse you ask?
The Tories also proposed to raise the minimum wage from £6.50 per hour to £9 per hour over the same period. The increase will fall on employers, not the government. The Treasury will save £12 billion, yet the higher minimum wage amounts to only £4 billion. In other words the government is taking £8 billion from people whilst also putting more and more burden on businesses and employers to pay this higher minimum wage!
This will result in more firms going bust and more people unemployed. This will cost the government more in benefits. Crazy backward economics?
As I pointed out in ‘Crap Jobs‘ automation will make more people unemployed. Up to 50% of existing jobs may be at risk in the next 20 years. Will enough new jobs be found to replace them? Of course not!
Also, is it even sensible to keep producing more and more shite we don’t need or can’t use?
So, as robots replace humans, humans will need incomes to replace wages from work.
Tax credits replace or top-up incomes, raising the minimum wage makes income more dependent on jobs. When wages go up we lose jobs to robots because they become cheaper.
So here is a radical (not new) idea. Government provides all citizens an unconditional tax credit / benefit amount, regardless of whether they work or not.
Bear with me. I know what you’re thinking. That would cost billions. Well, yes it would but we do away with the majority of the benefits system we have now, we just keep the bit that helps those sick, disabled, vulnerable etc. who cannot work.
This would mean that everyone gets a bare minimum amount of government money to spend on themselves. If they want more, they work, and get paid on top of this amount.
The UK is a very rich country and can certainly afford this but would it be a disincentive to work?
Well, the goal is not to strengthen the incentive to work, but to enable people to live without work. An unconditional basic income payment would make part-time work a possibility. Workers would be happy, have more leisure time, more time to spend with family, more time to spend money on services. All workers would have the freedom to make the same choices regarding how much to work, and under what conditions. No more slaves to the corporate machine that is driving us all to an early grave.
Now, if you think this is just a crazy idea and will cost too much money. Guess what, Switzerland have just voted on it, albeit rather negatively, and other countries, like Holland and Finland are seriously thinking about it too.
At the end of the day if you do the maths it will probably save the country billions! Plus everyone will be happier and more productive. We’ll have more time to spend our cash on services which will need to offer more jobs to cope with the demand. There will be no abuse of benefits because there won’t be any!
Just a thought.