Abolition of Agricultural Wages Board ‘would transfer £250m from the pockets of the poor to those of the rich’

18 January 2013 As much as £250 million will be transferred from the pockets of low-paid rural workers to the "coffers of landowners and farmers" if the government's proposals to abolish the Agricultural Wages Board are passed into law.

18 Jan 2013| News

18 January 2013

As much as £250 million will be transferred from the pockets of low-paid rural workers to the “coffers of landowners and farmers” if the government’s proposals to abolish the Agricultural Wages Board are passed into law.

Lord Whitty quoted these figures during the Grand Committee stage of the Enterprise and Regulatory Bill, in which the new Clause 28ZK for the Abolition of the Agricultural Wages Board and Related English Bodies was inserted just two days before Christmas.

In the original impact assessment produced before what he called a “very brief … [and] woefully thin” consultation period, it said £136 million would be taken from rural workers, but this was increased to £150 million in a subsequent assessment. It is estimated that, after £84 million in holiday pay, £4 million in sick pay and other employment costs such as national insurance are added in, the figure comes up to £250, Lord Whitty stated.

“[The] original impact assessment shows clearly that the sole intention of this measure is to remove over the next decade …. [millions] from the pockets of rural workers and transfer it ostensibly into the coffers of landowners and farmers,” he highlighted.

However, it will not stop there. In the end, farmers and landowners are unlikely to see any benefit at all, seeing as the supermarkets they supply will jump at the chance to demand a cut in food prices once the Agricultural Minimum Wage is gone. Thus, the millions taken from low-paid workers will soon be boosting the profit margins of some of the richest and largest companies in the world.

In order to justify this act, the government has argued there is no longer a need for the Agricultural Minimum Wage because the National Minimum Wage applies to everybody, but Lord Whitty pointed out that Agricultural Wages Boards do more than simply set a minimum salary, they also provide a pay structure for farmers to pay different workers by. Without this structure, wages will be dragged downwards, he argued.

Furthermore, these are vulnerable workers. Many are employed on small farms, a lot of the jobs are seasonal, and a significant proportion of the workforce are migrant workers.

The second argument the government has put forth to justify abolishing the Agricultural Wages Board is a contradictory one – that workers are generally paid more than the minimum salary and thus they will not be affected.

“You cannot have it both ways,” the Lord stated. “Either this measure will have no effect because employers will continue to pay more, or the £250 million saving in employment costs outlined by Defra’s calculations cannot be achieved.”

But what about boosting employment levels? The government has used this line repeatedly to justify employment law cuts and they do so again for this policy, but as always this argument is deeply flawed. Lord Whitty pointed out that young people – the demographic most desperately needed by the agricultural sector – will be hit hardest by the potential wage cuts and this is hardly the way to attract them to the industry.

Employers will be further hit by the increased complexity of pay negotiations. Several Lords pointed out that many farmers prefer the simplicity of paying their workers according to a structure already set out for them, and do not want to take on the extra work of negotiating current employment law legislation without that structure in place.

“How on earth is that reducing the time and effort of both farmers and farm workers?” Lord Hunt of King’s Heath asked.

“The Government are replacing a well ordered system, easily understood by everyone, with bargaining that will have to take place from farm to farm, involving both farmer and farm worker in the complexity of negotiations. Is there any group of workers who work harder than farm workers? I doubt it. Surely they are the “strivers” that this Government were so pleased to cite when Mr Osborne started to try to divide this nation up in a very disturbing and discomfiting way. We know that the real impact of this will be to drive down the wages of some very good and vulnerable people, and we ought to have nothing to do with it,” he added.

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