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Feburary 2000: The National Minimum Wage
The Story So Far The National Minimum Wage Second Report of the Low Pay Commission Chairman's Foreword Based on the recommendations in our first report, the Government introduced the UK's National Minimum Wage on 1 April 1999. This was a major intervention in the labour market, yet nine months after its launch our judgment is that it has been introduced successfully. To borrow a phrase from an American study, 'the sky hasn't fallen', or, as a national newspaper put it, 'minimum wage, minimum fuss'. When the Government announced its response to our first report, it asked us to evaluate the introduction of the minimum wage, and report our findings by December of this year. This request enabled us to set in train a full evaluation strategy well before the introduction of the minimum wage, establish baselines, agree a research programme, and begin a process of discussion and consultation which we maintained throughout the implementation period. We now have a great deal of evidence on which to base our conclusions and recommendations. The success of the introduction of the National Minimum Wage stems in part from the prudent nature of our initial recommendations, which were based on what we believed the economy and businesses could manage, and also what we knew would benefit large numbers of low-paid workers. But it is also the result of much hard work from all those who were determined that the introduction of the minimum wage should be a success, including the Government, trade associations, unions and voluntary organisations. Great credit is also due to the employers and workers in individual businesses who had to adapt pay and working practices to ensure that workers received at least the minimum wage. Women in low-paid work have benefited most from the National Minimum Wage, and we are pleased to see in early data that the policy has made a significant in-road in the gap between men and women's pay. More broadly, when combined with the Working Families' Tax Credit, the minimum wage makes an important contribution to tackling in-work poverty for families with children. The Government asked us to look specifically at 21 year olds. At the time of our first report, the data and evidence could lead to a number of possible judgments. But the data for this report are far clearer: for most 21 year olds the lower statutory minimum is irrelevant, as they already receive at least the full National Minimum Wage. We are confident in recommending that 21 year olds should be covered by the full rate. We have scrutinised the immediate impact of the minimum wage. But a full assessment cannot be undertaken now. More time is needed before national earnings data are available to help evaluate its full impact. Similarly, although our evidence suggests that compliance is reasonably high, it is too soon to offer a definitive assessment. The Government will need to continue to monitor and improve compliance levels. In this report we have stuck to our terms of reference. We were not asked to make recommendations on uprating, or on the coverage of younger workers other than 21 year olds, and so we have not done so. But the Commission is clear that for the National Minimum Wage to continue to be a useful labour market instrument, it cannot be left at its initial rate. The level must be reassessed, so that employers can plan ahead, and low-paid workers can continue to benefit. 
December 1999 To Report Summary To Recommendations and Suggestions | |
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