The National Minimum Wage has now been in place for almost
two years. When we produced our second report, some nine months after the
launch of the minimum wage, we concluded that it had been introduced successfully.
Nothing we have seen since has caused us to change our minds. The minimum
wage has brought benefits to many low-paid workers without any significant
impact on employment or the economy. This major intervention in the labour
market, which many considered controversial even a couple of years ago, is
now widely accepted throughout the UK. A minimum wage set at a sensible level
provides an effective labour market floor that protects workers from exploitative
pay levels and businesses from unfair competition.
We are producing our third report in two volumes. The first volume
includes our recommendation that the main rate of the National Minimum Wage
should be increased from October 2001. The second volume, which will
follow in May, will address the other issues in our terms of reference,
including young people and training, the interaction of the minimum wage with
the tax and benefits system, compliance and enforcement, and a process
for future review.
We decided to approach our report in this way following representations,
mainly from employers, on the length of notice they needed to be able
to plan and implement changes to the National Minimum Wage. The Government
had already said that it wished to implement any changes arising out of our
report from October 2001. Our terms of reference asked us to report by July
2001. Employers told us that they needed about six months’ notice. We
were sympathetic to this, not least because we have frequently been told that
one of the reasons for the successful introduction of the minimum wage was
the length of notice that employers received. We therefore decided to submit
our recommendation on a new rate to the Government as soon as possible after
we had taken a decision on it. And we agreed to produce the second volume
on the other issues by May.
Our first task in our third report was to make a fuller assessment
of the effect of the National Minimum Wage than was possible in our second
report. Chapter 3 of our report is a comprehensive analysis of the evidence
we considered. We drew on the research which we commissioned, the survey of
employers which we conducted, and examined official statistics. We considered
carefully the evidence, both written and oral, which we received from a wide
range of organisations. And we undertook a programme of regional visits throughout
the UK to learn from the experience of people affected by the minimum wage.
Once more we are most grateful to all those who took the time and effort to
inform our work. We hope that our assessment in Chapter 3 will provide a benchmark
for future work.
We have worked closely with the Office for National Statistics
to make progress on improving the data that inform our analysis. We hope that
the Office for National Statistics will continue to work on improving the
data so that we can have greater confidence in them. The number of people
covered by the initial rate was lower than we originally expected, but the
number of beneficiaries still remained large. About 70 per cent of beneficiaries
have been women, and the latest data indicate that the minimum wage has contributed
towards a further narrowing of the gap between men’s and women’s
pay.
I have again been impressed with the commitment of the members
of the Commission to work in partnership and to reach a decision with which
we are unanimously agreed. Our analysis and consultation have led us to conclude
that there is now scope for a significant increase in the National Minimum
Wage, but we have continued to adopt a prudent approach in making our recommendations.
In the foreword to our second report I quoted a national
newspaper which, in commenting on the introduction, wrote ‘minimum wage,
minimum fuss’. We had this judgment very much in mind in making our recommendation
on an increase to the minimum wage. We have recommended an increase which
will make a real difference to low-paid workers, but will at the same time
be manageable for business and the economy. And across the two volumes of
our report we will present a coherent set of conclusions and recommendations,
which is measured and straightforward and which we hope will contribute
to the successful future of the National Minimum Wage.
