Page last updated at 15:23 GMT, Thursday, 31 July 2008 16:23 UK

Ten year mark for the minimum wage

The national minimum wage will rise in October

When the national minimum wage was launched, it was set at 3.60 an hour - enough today to buy four cod fillets in batter at Tesco or an off-peak day ticket on the buses in Rossendale.

From 1 October, the wage will be 5.73 an hour for over 21s - a 59% rise on the original rate.

The government describes it as one of the most significant rights introduced during its tenure.

So has it been a success?

Decade on

The National Minimum Wage Act gained Royal Assent on 31 July 1998, just over a year after the new Labour government came to power with a manifesto pledge to introduce legislation as soon as possible.

It [the national minimum wage] creates a level playing field for business and boosts the economy
Business Secretary John Hutton

The wage came into force on 1 April 1999.

The government claimed that before the new law began some workers in the UK could be paid as little as 35p an hour.

Business Secretary John Hutton says it is one the most important rights brought in by the government during its first decade in power.

"It makes a real difference to the lives of many of our lowest-paid workers and protects them from exploitation," he says.

"It also creates a level playing field for business and boosts the economy."

Many business leaders - and the Conservatives - were convinced that it would lead to massive job losses, especially in low-paid areas.

But this did not happen, and the economy grew strongly, adding jobs.


There were some further concerns about the cost of introduction of the minimum wage, especially from small businesses.

Over 21s - 5.52 an hour
18 to 21-year-olds - 4.60 an hour
16 and 17-year-old - 3.40 an hour

While the vast majority of businesses have kept to the new rules, the TUC said in December that it believed there were still 150,000 workers being paid below the statutory rate.

The government announced in March that it was increasing the maximum penalty of those who flout the rules to an unlimited fine.

Close to 30m has been recovered in unpaid wages since 1999 by the enforcement body, HM Revenue and Customs.

Employees who wish to complain that they are not being paid to the statutory level can fill in a complaint form on the HMRC website or call the helpline on 0845 6000 678.

Most recently union anger has been directed at restaurant owners who use tips and service charges to top up the pay of their staff to reach the minimum wage level.

But on its ten-year anniversary, the government announced this would be outlawed from next year.

Pay rise

The next rise in the minimum wage will come in October. The rate for workers aged over 21 will increase by 3.8% from 5.52 to 5.73.

The government has announced new rules regarding restaurant tips

The amount will go up from 4.60 to 4.77 for 18 to 21-year-olds, while minimum pay for 16 and 17-year-olds will get a rise from 3.40 to 3.53.

The government says the gender pay gap has narrowed in the last ten years by 5%, owing in part to the minimum wage.

But the TUC says that a third of women in work still earn less than 100 a week. Only 14% of working men earn below three figures.

It wants to see this changed in order to tackle child poverty which rose for a second year in a row in 2006-7.

The government has pledged to end child poverty by 2020, and halve it by 2010. But the latest official figures show that it is falling behind in meeting that goal.

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