Minimum Wage versus Wage Compression

Raising the Floor While Letting the Roof Collapse

Yesterday, the government announced a new minimum wage rise. Politically, it looks perfect — a bold, pro-worker headline with no cost to the Treasury.

But raising the floor while leaving the rest of the pay structure untouched isn’t progress, it is simply a political stunt.

It creates a real problem for the economy, and it is called wage compression.

Experienced staff suddenly earn the same as new starters. Skilled and semi-skilled roles are devalued. Workers begin to wonder, why train, why take on debt, why stay loyal when your pay barely moves above a new starter?

The result is falling morale, higher turnover, and devalued skills. Small employers feel this pressure hardest. Unlike large chains, they cannot absorb wage hikes without cutting hours, jobs, or investment.

Meanwhile, the minimum becomes the norm — not the safety net it was meant to be.

The Bigger Problem: No Pay Progression

Announcing increases without broader pay progression is an easy political win but a poor strategy for real workers.

England and the UK now has one of the highest minimum-wage-to-median-wage ratios in the developed world. Yet weak British Trade Unions have allowed stagnant progression and trapped millions at the bottom.

This is what happens when unions follow a political party rather than defending worker rights — they support the government without question.

Workers Need More Than a Higher Starting Point

Another minimum wage rise is not enough. Workers need a ladder, not just a higher starting point.

Trade Unions, such as the Workers of England Union, welcome a strong minimum wage but also call out the politics behind it.

Without strong employment rights, a strong economy, and real investment in skills, raising the floor alone simply shifts problems — it doesn’t solve them.

Conclusion

Workers deserve more than headlines. They deserve real pay progression, respect for their skills, and a system that rewards effort and loyalty, not one that raises the floor while the roof collapses.

The Trade Union movement must call out political stunts and demand that minimum wage increases are matched with full pay progression. Otherwise, wage compression will continue to damage the economy.