A BELATED coalition attempt to look tough on firms which cheat on the minimum wage was criticised by union leaders yesterday as a drop in the ocean compared to Britain’s cost of living crisis. 

The government’s heavily touted crackdown on crooked employers, which kicked off last year, outed 25 companies which had been paying less than the national minimum wage.

Between them the firms, which include a hire company, a hairdressers, a hotel and a retail outlet, owe workers more than £43,000 in arrears, and face fines totalling more than £21,000. 

Business Minister Jenny Willott said: “If employers break the law they need to know that they will face tough consequences.”

However the initiative coincided with a new report from GMB and think tank Class which points out the massive damage to low-paid workers being inflicted by entirely legal means.

The union’s six-point report, How Unions Can Make Work Pay, points out that a combination of deteriorating job security, lagging minimum wage levels, soaring rents and plunging tax on the rich are causing a collapse in living standards for working people — forcing more and more onto benefits.

GMB national officer Martin Smith said while prosecutions of wage dodgers were welcome, such measures would not tackle the wider issue of poverty wages.

He said the fact that 2.6 million workers earning either minimum wage or 50p over it are having to rely on benefits points to critical issues within the system itself.

Mr Smith told the Star: “What was intended to be a floor for people’s earnings from which they could bargain has become a ceiling. So the minimum wage has become a maximum. 

“That’s a much much bigger issue for us than catching a relatively small amount of employers who try to dodge the minimum wage. 

“The real issue is that minimum wage is a state-subsidised wage and these are state -ubsidised employers who have created minimum wage ghettos in the economy.”

The GMB is calling for more oversight so that authorities can judge when companies can afford to pay reasonable wages themselves. The Resolution Foundation estimates that subsidising low-paying employers will cost £20 billion by 2024. 

 Mr Smith added: “One of the things we’re specifically calling for is minimum wage employers to open their books and prove they don’t have the profits. Like a normal person would if they’re means-tested for employment benefit.  

“Some of these companies are massive multinationals hosting profits around the world and we just don’t believe they need to rely on a subsidy from British taxpayers.”

As part of its report the GMB is calling for a £10 living wage, an end to zero-hours contracts, free childcare, the closure of tax loopholes and greater trade union powers.

The TUC, which estimates there are between 250,000 and 300,000 people who do not get paid minimum wage, welcomed the crackdown but called for more effort on the government’s part.

General secretary Frances O’Grady said: “All minimum wage cheats should be named and shamed, and HMRC need greater resources to catch even more crooks.”