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Table A4
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Low Pay Commission Research Projects
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Contractor
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Aims and Objectives
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Methodology
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Results
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D. Adam- Smith,
G. Norris and S. Williams (University of Portsmouth Business School)
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To investigate
the impact of the National Minimum Wage on the hospitality industry
in the Portsmouth area.
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24 semi- structured
interviews with managers or proprietors and 21 semi- structured
interviews with workers (covering current and recent experience
of 42 jobs).
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The introduction
of the minimum wage had little impact on the industry in Portsmouth.
Few establishments have been required to increase wage rates as
a direct result and even fewer adversely affected. No direct evidence
exists of reduction in either staffing levels or employee benefits.
Some acceptance by employers of the part that training can play
in making businesses profitable.
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A. Bullock,
A. Hughes and F. Wilkinson (ESRC Centre for Business Research, University
of Cambridge)
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To assess the
impact of the minimum wage on small and medium- sized enterprises.
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Postal questionnaire
(254 responses) of small and medium- sized businesses, in the cleaning
and security industry, with comparisons drawn against the 1999 survey.
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The main impact
of the minimum wage was found to be on increased prices and reduced
profits, but there was a range of other impacts. Firms responded
by: increasing wages to restore differentials; raising efficiency
by increasing control of both labour and non- labour costs; reducing
employment and hours worked and increased training. On balance firms
reported an increase in labour turnover.
Some firms responded
by attempting to improve their competitive strategy. Firms put increasing
emphasis on price, personal attention to clients’ needs, quality
and reliance on established reputation. Greater emphasis was also
placed on speed of service and specialisation.
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F. Colgon, M.
Davis and S. Jefferys (University of North London)
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To identify
and assess the impact of the National Minimum Wage on ethnic minority
workers in North London.
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Interviews with
225 employees and 129 employers/ managers of commercial premises
in the North London area. In- depth interviews with representatives
of 12 community organisations.
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Awareness of
the minimum wage was found to be high with two- thirds of employees
and four- fifths of employers having heard of it. But only one in
four of the employers and one in five of the employees knew the
correct rate. 29% of employees interviewed stated that they were
working ‘off the books’.
The introduction
of the National Minimum Wage and its enhancement in 2000 made little
impact, largely because wages tended to be above the minimum wage
level. 5.2% of employees who had heard of the minimum wage received
a pay rise as a result of its introduction.
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G. Cox (Greater
Manchester Low Pay Unit)
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To analyse the
rates of pay available to younger workers, and to study the way
in which the minimum wage has had an impact on the youth labour
market.
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Analysis of
Jobcentre and Careers Services data on vacancies. A short questionnaire
to Careers Services about their experience of the introduction of
the minimum wage. Interviews with small groups of young people about
their understanding of the minimum wage and their own experiences
of it.
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Many jobs for
16 and 17 year olds already pay levels equivalent to or above the
minimum wage rates either for 18— 21 year olds or for 22 year
olds. At the same time some are paying very low rates of pay. The
use of age- related rates in jobs advertised in Jobcentres is small,
and concentrated in few occupational sectors. Most Careers Services
said that the number of vacancies had generally remained unchanged
since the introduction of the minimum wage. In general, jobs that
offer formal training offer lower rates of pay than jobs which offer
‘in- house’ or ‘on- the- job’ training.
Many of the
young people questioned were aware of the National Minimum Wage,
but not its detailed aspects.
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T. Dignan (Equality
Commission for Northern Ireland)
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To examine the
impact in Northern Ireland of the National Minimum Wage on the employment
patterns of men and women.
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Firms, in low-
paying sectors, were selected for interview — 112 had preliminary
interviews and 30 of these full interviews. Data were collected
from appropriate organisations, and focus groups convened to discuss
issues.
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Most firms (73%)
said the introduction of the minimum wage had minor or no implications
for their pay structures. The majority of employees in firms affected
by the minimum wage were women. No significant negative impact to
date on equality of opportunity due to adjustments to jobs or hours,
or the secondary employment impact of adjustments via prices and
profits.
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J. Heyes and
A. Gray (Leeds University Business School)
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To examine the
impact of the National Minimum Wage on the pay, recruitment and
training practices of small firms, with particular regard to younger
workers.
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A questionnaire
survey of small firms (258 responses) and 12 case studies.
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The minimum
wage resulted in pay increases in more than half of responding firms.
The three most common means of offsetting labour costs were increasing
prices, reducing working hours and improving product or service
quality. The minimum wage appears to have stimulated an increase
in training activity. In a large majority of cases the pay and training
received by workers aged 21 were more in line with that of older
workers than younger workers. A small minority of employers sought
to employ more 16 and 17 year olds as a result of their exemption.
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M. Hudson (University
of Cambridge)
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To examine the
impact of the minimum wage on disabled people and therapeutic activity,
looking particularly at the definition of work and interaction with
the benefits system.
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Case studies
of a variety of employment projects, 8 day centre based projects
and 7 non day centre based projects. A total of 49 interviews, predominantly
in Newham and Salford.
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For the most
part employment projects have not seen an adverse impact on opportunities
for therapeutic activity or supported employment, but the parameters
of that activity were being curtailed as projects tried to stay
within the benefits and minimum wage rules. There were real concerns
about moving into employment and losing benefit entitlement. Increased
flexibility would provide a greater degree of opportunity, choice
and independence for disabled people.
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Incomes Data
Services Ltd.
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To gather information
on, and examine the issues in, minimum wage applications to employment
tribunals.
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Information
was analysed from 44 published decisions of employment tribunals,
out of around 300 cases related to the minimum wage which have gone
to a tribunal hearing. The cases were selected for raising specific
legal or factual issues.
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The cases examined
raised various issues including training, travel time, allowances,
detriment and dismissal. In the sample two- thirds of applicants
were women and only a minority still worked for the same employer
when the claim was brought. Workers were more successful in non-
payment claims than in dismissal claims. The average hourly rate
which workers stated they were earning was £2.28.
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Incomes Data
Services Ltd.
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To monitor the
effects of the minimum wage, in particular to assess the impact
of the June increase for young people and of the increase in the
main rate in October 2000. To focus on key developments in lower-
paying sectors, young people and the public sector.
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IDS contacted
a large number of organisations in a variety of industries, using
questionnaires, telephone and face- to- face interviews. The first
report included data collected up to October 2000. A second report
included data collected up to February 2001.
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An overview
of the key rates of pay in low- paying sectors was provided as well
as focusing on the minimum wage effect on differentials, young people,
staffing levels and recruitment and retention. A key theme that
emerged was that the minimum wage and the tight labour market were
causing upward pressure on pay, which was sometimes offset by increases
in productivity or changes in work practices. Consequently many
firms had moved away from the bottom end of pay and towards £4.00
— the ‘mezzanine’ floor. No significant negative
employment effects were detected, and the impact on differentials
was limited. IDS found that the use of the Development Rate for
young people was low and had been discontinued in many pub chains.
There was a trend towards adult rates of pay starting at 18. The
minimum wage had little impact on the public sector, with most pay
rates above the minimum at the time of introduction.
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B. Blyth (Leicester
City Council)
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To investigate
the impact of the National Minimum Wage on workers from ethnic minorities,
including awareness of their rights, non- compliance and the informal
economy.
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Interviews were
conducted with 54 ethnic minority workers paid at or below the minimum
wage in the Belgrave area of Leicester.
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30 workers out
of 54 were paid on average below the minimum wage. Wages as low
as £1.60 per hour were found and none of the pieceworkers appeared
to receive the minimum wage. Awareness of the rate of the minimum
wage was high, at 70%, but there was a lack of awareness of how
to complain. There was a real fear among workers that if they complained
they would lose their jobs. There were examples of the informal
economy in operation — in some cases the workers involved were
content to collude but in others they were not.
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R. Lucas and
M. Langlois (Manchester Metropolitan University)
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To examine the
impact of the National Minimum Wage on students in work (mostly
in the Greater Manchester area).
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Survey (368
respondents) and follow- up interviews (42) of students in university,
further education colleges and schools.
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Most 18—
21 year olds were paid well above the current Development Rate.
The minimum wage has not affected the number of jobs available to
students and there is no evidence that employers or students have
adjusted working hours in response to it. Many students had little
awareness of the minimum wage beyond knowledge of the rates.
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S. Sekharan
and R. Lucas (Manchester Metropolitan University)
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To compare the
impact of the National Minimum Wage on treatment of young workers
in hospitality firms in North Wales and North Manchester.
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A postal questionnaire
(29 respondents) and follow- up telephone interviews (7).
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The minimum
wage has had little impact on the employment practices and training
of 29 hospitality firms in North Wales and North Manchester, and
has not led to the substitution of young workers for older workers.
Where employers pay lower rates to young people it is usually because
of their perceived lower responsibilities, reliability, experience
and skills, rather than age alone.
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R. Dunstan and
M. Tarpey (National Association of Citizens Advice Bureaux (NACAB))
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To examine the
scale and nature of National Minimum Wage- related inquiries to
the CAB Service; the characteristics and experiences of CAB users
in relation to the minimum wage; and the issues raised by CAB users
regarding compliance with and enforcement of the minimum wage.
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A representative,
random sample of 64 CABx conducted a 3- month monitoring exercise
of all minimum wage- related queries (120 in all). This was supplemented
by the views and experiences of the centre managers or employment
rights advisers.
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There has been
a decline in the number of minimum wage- related inquiries made
to the CAB Service nationally from an estimated 50,000 in April—
December 1999 to an estimated 5,000 inquiries per year by late 2000,
many fewer than for some other employment issues. In terms of the
advice work of CABx, the minimum wage appeared to have settled down
since 1999, with non- compliance largely confined to particular,
low- wage areas. Nevertheless there continued to be some lack of
awareness of entitlement and enforcement methods.
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L. Ellison (National
Group on Homeworking (NGH))
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To investigate
the impact of the National Minimum Wage on homeworkers, with particular
emphasis on their awareness of their rights and willingness to take
enforcement action.
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Research conducted
with homeworkers known to the NGH or who contacted their Helpline.
Initial questionnaire completed over the phone or in interviews;
30 follow- up in- depth interviews.
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Generally, awareness
of rights was good, but only a quarter of the industrial homeworkers
involved in the research had hourly rates of pay equal to or above
the minimum wage. Of those paid below the minimum wage who had not
made a formal complaint, half had not done so for fear of losing
work. Most of the 14 homeworkers who complained formally were satisfied
or very satisfied with the actions of individual compliance officers.
But all of those who had pursued a claim for non- payment were dissatisfied
with the process.
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E. Phimister,
I. Theodossiou and A. Gilbert (University of Aberdeen)
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To analyse the
potential impact of the National Minimum Wage on wages and household
incomes in rural areas.
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Analysis of
data from the BHPS for the years 1991— 98. Two distinct rural
groups were considered in addition to individuals living in non-
rural areas.
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Low pay was
more common in the remote rural group than elsewhere. Overall remote
rural wages were significantly less than non- rural rates even after
adjustments were made for differences in characteristics such as
education and industrial structure. Upward wage mobility from low
pay was lower and downward wage mobility higher in the remote rural
group. The potential impact of the minimum wage on earnings inequality
is relatively small but is greatest in remote rural areas. The potential
impact of the minimum wage on poverty could be expected to be greatest
in remote rural areas, as a greater proportion of remote rural workers
affected by the minimum wage were resident in low- income households.
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J. Schneider
(University of Durham)
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To explore the
impact of the National Minimum Wage on employers’ attitudes
to the employment of disabled people.
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Questionnaires
sent to 100 employers with experience of employing disabled people
and 100 Disability Employment Advisors; 55 employers and 47 DEAs
responded. Delphi method used to draw conclusions and analyse differences
between the two groups.
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There was general
agreement that the minimum wage has benefited disabled people by
making low- paid jobs better paid. About two- thirds of respondents
thought the minimum wage had not reduced opportunities for disabled
people to gain paid work. There were concerns about the adequacy
of Access to Work funding, the costs of continuing to employ people
with progressive conditions, and the interaction of the minimum
wage with the Supported Employment Programme and with the benefits
system.
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M. Stewart (University
of Warwick)
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To estimate
individual- level employment effects of the minimum wage.
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Uses three different
household surveys — the LFS, NES and BHPS — to construct
a model to estimate the impact of the introduction of the minimum
wage on the probability of subsequent employment.
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The research
presents estimates of the effects of the introduction of the minimum
wage on the employment prospects of those affected. A feature of
the methodology is that the group directly affected by the minimum
wage is compared with a similar group from just above the minimum,
which is used as a counterfactual. The overall evidence suggests
that there were zero, or, if anything, small positive effects for
adult men and young people. The conclusion for adult women was less
clear- cut, but even for this group the effect was close to zero.
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M. Stewart (University
of Warwick) and J. Swaffield (University of York)
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To use new information
on the BHPS to evaluate the impact of the National Minimum Wage.
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Uses wave 9
(Autumn 1999) of the BHPS. This included new questions specifically
about the impact of the National Minimum Wage on earnings, compliance,
employment and job prospects.
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The research
covered a range of labour market effects of the minimum wage. On
earnings, it found a pronounced spike in the earnings distribution
at the level of the minimum wage, and limited impact on differentials.
The vast majority of workers were paid above the minimum wage, those
paid below were more likely to be women, young people, the unskilled
and part- timers. Most workers affected saw no change in hours or
employment. There was some evidence of a positive incentive effect
of the minimum wage, with one- fifth of the unemployed reporting
a widening of jobs they were prepared to take.
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H. Sutherland
(University of Cambridge)
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To explore the
impact on poverty and on the incentive to work of the National Minimum
Wage, in the context of changing policy on taxes and benefits.
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Analysis based
on the Microsimulation Unit’s tax- benefit model, POLIMOD,
based on 1994/ 95 and 1995/ 96 FES, uprated to 2000/ 01 levels of
incomes, taxes and benefit rates.
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The combination
of tax- benefit changes and the minimum wage is calculated to reduce
the overall poverty rate from 18.6% to 14.4%. The impact of the
minimum wage in reducing poverty rates is small. The main contribution
of the minimum wage is in underpinning the strategy of benefits
and in- work tax credits to supplement the family incomes of the
low paid. The minimum wage makes a positive contribution to in-
work income, particularly to families where WFTC and other in- work
benefits are not payable. However there are also cases where work
does not pay, particularly among the partners of the unemployed
who are on benefit.
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R. Bullard (West
Midlands Low Pay Unit)
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To investigate
non- compliance and detriment related to the minimum wage; the extent
of enforcement action; reasons for not enforcing; and the effectiveness
of enforcement action.
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Analysis of
159 calls to the Unit’s advice line between September 1999
and December 2000. A follow- up postal/ telephone survey with 40
callers. Interviews with organisations involved with compliance
or enforcement aspects of the minimum wage.
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Minimum wage
inquiries represented 10% of inquiries to the Unit, and 61% of the
inquirers were women. Of inquirers who gave a pay rate, 33% earned
less than £3 per hour. Out of 24 respondents to the postal survey
who were not receiving the minimum wage, 17 raised the issue with
their employer and 5 took no action.
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J. Winters (Canterbury
Christ Church University College)
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To assess the
impact of the National Minimum Wage in the UK thoroughbred racing
industry.
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A postal questionnaire
(77 respondents). Interviews with directors of the British Racing
School, and the Northern Racing College.
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The impact of
the minimum wage has been overtaken by the labour market shortage
currently facing the industry. Hourly wage rates in most stables
exceed the provisions of the minimum wage. There was some evidence
of increased wages and increased training fees resulting from the
introduction of the minimum wage, but overall the impact has been
small.
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