Is Ed Miliband’s Proposal Feasible?

Ed Miliband, British labour leader unveiled a series of initiatives to boost an economy based on higher skills and wages and the ‘dynamism’ of small businesses. In light of the current insecure labour market and declining living standards in Britain, the bulk of reformative proposals seek to reverse the adverse conditions accordingly.

In a nutshell, the plan involves the following measures for the employment sector:

- Large firms will be required to employ apprentices for every non-EU worker

- Impose sanctions to companies failing to comply with the minimum wage law. Fines shall be increased from £5,000 to £50,000 and Councils will assume a greater role in enforcement.

- Vary the minimum wage by employment sector. Therefore, Minimum wage in the finance sector will be different from that in the hospitality sector.

- Ending the abuse of zero-hours contracts

- Abolish the bedroom tax or reinstate the spare room subsidy. If tenants have one spare room, the amount of rent eligible for housing benefit will be cut to 14%. If they have two or more spare rooms, the cut will be 25%.

- Primary schools will be required by law to provide chargeable childcare from 8am to 6pm.

- Bring forward £10 billion of infrastructure investment to build 400,000 homes with a prospect to pledge to build a million over five years.

A critical review of the plan

Although the proposals outlined above deem to be reasonable for reinvigorating the UK’s labour market, it is not to be assumed that they are flawless. Critics have claimed that they are too narrowly targeted or unfeasible.

Take for instance the first measure about taking on a 'local' apprentice for every non-EU worker hired at a company. The proposal cannot merely target British youth, since according to EU law the scheme will have to be open to EU nationals. Therefore, it will not be a measure that will target and benefit British nationals.

Also, the minimum wage policy will mean that Councils will require new resources to police the minimum wage, while varying it by employment sector will work against smallest companies. It is wrong to assume that all companies working in the same sector operate on the same margins. This will also unfairly differentiate industrial sectors according to criteria which might deem subjective. Consequently, this measure may be discriminatory against employees working in different sectors.

Most importantly, Labour has not specified how the infrastructure investment plan will be economically sustained in the long run and who is going to pay for it?