From Mini to Maxi Jobs? Low Pay, ‘Progression’, and the Duty to Work (Harder)

Abstract. The scale of low pay and in-work poverty affecting the bottom three deciles of the labour market highlights the weaknesses in the two main mechanisms for assisting the low-paid: the statutory minimum wage provided for by the National Minimum Wage Act 1998 and State in-work benefits, particularly Universal Credit (UC) as it operates under the Welfare Reform Act 2012 and Universal Credit Regulations 2013. Both mechanisms are failing badly. The paper argues for new approaches. On the Labour side of what may be called the Labour Law–Social Security Law interface these include reconstruction of the national minimum wage scheme in the 1998 Act so that there are two minimum wage floors: a primary floor based on the current national scheme; and a higher, secondary floor at sectoral level. Sectoral wage-setting, informed by support from a Low Pay Commission with an extended remit, could in time pave the way to wider-ranging, regulated sectoral collective bargaining and systems which align more closely and efficiently to what employers can afford, and relieve the growing fiscal pressures on in-work social security. On the Social Security side, remedial work on UC is urgently needed, particularly on the work allowances which set the earnings thresholds at which in-work State support starts to be withdrawn. If mandatory ‘progression’ requirements under the in-work progression (IWP) scheme are to continue—which is likely given the government’s concern that, without this, workers in low hours, low paid mini jobs will opt to stay parked in such highly subsidised work—then exemptions and protections need to be strengthened and put on a statutory footing (particularly for workers with family responsibilities). Introducing what would, in effect, be a ‘right not to work’ in prescribed cases—typically when requirements impact disproportionately on workers and their family members—would go some way to establishing the necessary safeguards. Clearly, both low pay mechanisms face a crisis of growing proportions: a crisis of coverage as dependence grows and newer groups look to the State for support; a fiscal crisis as costs rise and cuts to support impact on its effectiveness; and a political crisis as support for UC and the wider low pay regime erodes.