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Alastair Hatchett, Incomes Data Services
Substantial growth at bottom end of jobs market
 real 28k

Bharti Patel of the Low Pay Unit
"The economy can sustain a much higher rate"
 real 28k

Monday, 7 February, 2000, 10:40 GMT
Minimal impact of minimum wage

The introduction of the national minimum wage in the UK has not caused job losses or upset industry pay structures, according to pay specialists Incomes Data Services (IDS).

Taking stock after the first 10 months of operation, IDS says that "the whole process has been relatively orderly".

The pay analysts report that "many of the earlier worries about job loss, the disruption of pay structures and the impact on differential have been found to be groundless".

Service job gains

"In fact there were major job gains in the services sector as a result of broader economic conditions", the report says.

That has led trades unions to renew their calls for the minimum wage to be increased.

The Government now had "no excuses" for keeping the hourly rate at 3.60 for adults and 3.20 for workers aged 18-21 years, said Dave Prentis of the public service union Unison.

"This is a golden opportunity to do something concrete to alleviate poverty," he said.

"There should be an immediate increase to turn it into a living wage - 5 an hour would be a good start."

Byers 150 Stephen Byers: No increase
But although the Chancellor, Gordon Brown, was reported to be in favour of an increase, the Trade and Industry Secretary, Stephen Byers, said last month it was not on the government's agenda.

He argued that a big increase could damage the economy, and advised a cautious approach.

The Incomes Data Services report notes that the economy was weak and growth close to zero when the national minimum wage was introduced in April 1999.

Figures from the Office for National Statistics had indicated that about 1.9m people - or 8.3% of the UK workforce - would see wages rise under the new mandatory pay levels.

But some economists predicted that the increases could cost up to 80,000 jobs over three years.

While the new rates forced a large number of companies to pay their staff more, according to IDS this "did not bring a sharp upward step in average earnings in the spring of 1999".

The development of average earnings is closely watched by the Bank of England as an indicator of inflationary pressure.

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See also:
07 Feb 00 |  Business
Should the government raise the minimum wage?
30 Oct 99 |  Business Basics
Minimum wage in the UK
30 Mar 99 |  Minimum wage
Q & A: Making sense of the minimum wage
28 Mar 99 |  The Economy
Minimum wage job warning
11 Jun 98 |  UK
Union anger over minimum wage 'tips'

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