Conclusion

3.97 The minimum wage appears to have bedded down in a number of the sectors where it was formerly seen as a cause of grave concern: while still significant, its impact on the cleaning, social care and security sectors seems if anything to have reduced slightly. Our consultation and research also suggest that it is no longer such a significant problem for a majority of small firms. We note, however, that some larger firms, particularly in the retail sector, are becoming more concerned about the impact of recent upratings, and in particular the October 2004 increase to £4.85. Maintaining pay differentials is a common issue across many of the nine low-paying sectors we examined. Overall, we conclude that the October 2003 upratings have been absorbed without negative impact on employment and that, in general, firms have adjusted well to the upratings. There is currently only limited data available relating to the October 2004 upratings.

3.98 A potential conflict between salary sacrifice schemes and the National Minimum Wage was brought to our attention during consultation and in October 2004 the Government asked us to advise whether childcare vouchers should be allowed to count towards minimum wage pay. Salary sacrifice arrangements can be complex and cover a range of staff benefits in addition to childcare, and we believe a number of important factors need to be weighed very carefully before a conclusion can be reached. We recommend that the Government ask us to review the issue of salary sacrifice in depth and to report by February 2006.

3.99 Concerns remain about funding in the social care sector. We recognise the progress that has been made on funding in relation to the minimum wage, but the approach by local authorities has been variable across the country. We therefore recommend that the Government continue to make clear to local authorities that policies on commissioning care should reflect the costs of provision. We also recommend that the Government actively monitor the approach taken by local authorities to the funding of social care. A further area of concern is the lack of understanding of the application of the minimum wage to 'sleepovers' and on-call arrangements. We believe this could be successfully addressed by more targeted publicity.

3.100 The provision of accommodation to some employees is most common in two of the low-paying sectors: hospitality and agriculture. We have considered the evidence submitted regarding the level of the maximum daily accommodation offset and recommended an increase in line with the adult rate.

3.101 In this Chapter we considered the impact of the minimum wage on the low-paying sectors. Some of these sectors are characterised by employing particular groups of workers, for example the overwhelming majority of nursery nurses are female, most of the employees in the security sector are male and the hairdressing sector employs a significant number of young trainees. In Chapter 4 we look specifically at groups of workers who are likely to be more affected by the minimum wage.