Joe - I agree with much of what you are saying -the problem in my opinion is that by paying people to work for low wages all that is achieved is that you get more and more low paid workers and the bill to top up the wages grows and grows - in today's values from about £7 billion in the mid 90s to over £30 billion currently!

There is no incentive for employers to pay higher wages or for employees to demand them - the labour market has been distorted.  Working tax credits are no longer a safety net for those workers incapable of demanding a higher wage but have become a prop for businesses.