Before the onset of the current medical and economic crisis, most Western governments adopted a policy of not interfering with market forces including the demand for and supply of labour.
They did all they could to project themselves as "business-friendly" despite increasing evidence of the income and wealth inequality gaps becoming wider and slowly destroying the fabric of society.
We are now seeing governments adopting new economic strategies to ensure that we return to normality as early as possible. Businesses, which up to some months ago resented government interference with the dynamics of free-market forces, have now built strong lobbies to get as many subsidies from the governments as they can.
Of course, it is understandable that governments' primary aim in the COVID crisis management is to prevent as many jobs from being lost as possible. But other critical socio-economic issues have been put on the back-burner of the government’s priorities for at least the past decade.
Well-paying jobs are being replaced by low-skilled, low-wage, insecure work. Underemployment is rife. Precarious working conditions abound. The poverty trap is now ensnaring not just families with long-term health problems but also the working poor. Luckily for these people, NGOs like Caritas often act as the voice of conscience in society.
The latest Caritas report on the impact of poverty on our society, ‘A Minimum Essential Budget for a Decent Living Wage 2020’, reaches some sobering conclusions. They show how the have-nots in our community are being short-changed by the haves.
The inadequacy of the current minimum wage affects different types of distressed households, including families with children with only one parent in low-paid employment, single-parent families and elderly couples with insufficient income to cope with daily living expenses.
The case for a living wage has never been stronger. A good definition of a living wage was given by an Australian judge way back in 1904. Judge H.B. Higgins argued that “A fair and reasonable wage for an unskilled worker must take into account the normal needs of the average employee regarded as a human being in a civilised community rather than just company profits”.
Normal needs today go beyond the ‘biological minimum’ to prevent a person from starving. If we want to address the challenge of reducing poverty, we need to ensure that children in distressed household are guaranteed a healthy diet.
But we also need to make sure that those living in poverty still get adequate and prompt medical care. Furthermore, children in poor households must be given the educational aids that help them acquire the skills to find good employment and climb the social ladder.
The minimum wage is specifically intended to take aim at the inherent imbalance in power between employers and low-wage workers that can push wages down to poverty levels. The argument used by some economists, that raising the minimum wage can reduce employment opportunities for the unskilled, is increasingly being challenged.
In a letter addressed to former president Barack Obama in 2014, 600 US economists argued that comprehensive studies showed concluding evidence that minimum wage increases resulted in “strong earnings effects and no employment effects”.
The road to economic recovery from the present medical and economic crisis must include crucial milestones to revamp the minimum wage mechanism to ensure that it caters for a living wage for those most at risk of poverty.
A good place to start would be the recommendation made by Caritas for a task force that would re-examine the cost-of-living adjustment mechanism, aimed ultimately at providing all citizens with the means to live decently.