Would a minimum hourly rate for trades reverse the race to the bottom?

The minimum wage provides some control over the purchase of labour, the next step in reforming the labour market and solving the productivity puzzle should be some control over the supply of labour.

One of the key arguments put forward by the Leave campaign was the downward pressure on skilled wages caused by EU migrant workers, a race to the bottom, the solution – Brexit, a sledgehammer to crack a walnut.

I propose trade associations such as ‘The Chartered Institute of Plumbing and Heating Engineers’ recommend to the Department for Business, Energy and Industrial Strategy a ‘going-rate’ for their trade which is enforced in the same way as the minimum wage. The going-rate is the minimum £/hour chargeable for a qualified electrician, plumber, joiner, mechanic, etc. Higher rates can be charged according to experience and qualifications. Lower rates cannot be offered. Regional variations can apply, similar to the minimum wage model.

This system would stop the race to the bottom, the dog eat dog, cutthroat labour market which devalues skills, discouraged investment and reduces tradespeople to commodities.

Trades would be protected, valued and recognized as a secure career, new talent would be attracted and continuous professional development encouraged.

Grades according to experience and qualification could be introduced on a voluntary basis as the system evolves, Grade 1 for a ‘time-served’ apprentice, Grade 5 for advanced qualifications and 10 years experience, no upper limit, hierarchy defined by trade associations. Higher grades would be linked to higher pay grades.

Business would compete on quality of service and reputation, not solely on price. Online comparison sites such check-a-trade would become increasingly relevant as customers placed greater emphasis on service and added value.

With a fixed minimum going-rate, businesses would be encouraged to invest in new equipment and technology to reduced job times in order to obtain a competitive advantage, thereby improving efficiency and helping to raise productivity.

Going-rates would be reviewed periodically by the Department for Business, Energy and Industrial Strategy in consultation with the trade associations.

As Theresa May kicks the Northern Powerhouse into the long grass she should show our tradesmen and women some love by stopping the race to the bottom and acknowledge the massive contribution they could make to solving the UK’s productivity puzzle.