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The BBC's Brian Milligan
"Economically it could be highly destabilising"
 real 56k

Friday, 8 September, 2000, 20:19 GMT 21:19 UK
Minimum wage fight
Many part-time women gained from the minimum wage
Many part-time women gained from the minimum wage
The TUC is set to continue its battle with the government over the level of the minimum wage when it meets in Glasgow this week.

The unions are fighting to increase the minimum wage to 5 an hour, arguing that it is not yet set at level that constitutes a living wage.


Discredited employer scaremonging should not be permanently built into the minimum wage

John Monks, TUC
The national minimum wage, a Labour Party manifesto commitment, was first introduced in April 1999, at a rate of 3.60 per hour, and it will be increased by 10p to 3.70 on 1 October.

But there is separate wage rate for young people under 21, which has been set at 3.20, an increase from 3.00 in April.

And 16 and 17 year olds are entirely exempt.

The TUC wants to abolish the separate youth rate

And it wants automatic annual upratings.

At present, the Low Pay Commission, which advises the government on the minimum wage rate, reviews evidence periodically before deciding whether to recommend any changes.


"Now is not the time to throw caution to the winds

Susan Andrews, CBI
TUC General Secretary John Monks said:

"The introduction of the minimum wage is one of this government's greatest achievements.. now that it is clear that the impact on jobs is negligible, the minimum wage should be uprated to a more realistic level."

"Discredited employer scaremonging should not be permanently built into the minimum wage."

Employers lash out

The employers organisation, the CBI, has attacked the TUC proposals for a 35% increase in the minimum wage.

The CBI says that an increase to 5 an hour was "potentially very damaging."

"Now is not the time to throw caution to the winds, said the CBI's Susan Andrews. "So far we have been prudent and successfully implemented the minimum wage without a significant negative impact. Let's not blow it now."

The employers are concerned that by increasing the minimum wage, it would be widening its scope, with 2.5m workers covered compared to 1.7m at present.

They also argue that companies would be less likely to take on young people if they had to pay them the same wages as older workers.

And it fears that an automatic upratng of the level of the minimum wage would put an unfair burden on companies, especially in a time of recession.

No job losses yet

So far the evidence does not suggest that the national minimum wage has had a major impact on jobs.

A survey by the consultants Income Data Services found that there was no sharp upward increase in average earnings in April 1999, when the minimum wage came in.

And the number of low-paid, service sector jobs increased, as the economy boomed.

Finally, the fears of many employers, that higher wages for lower paid workers would lead other workers to ask for higher wages to maintain their differentials, did not happen.

However, the government may still wish to delay any further increases in the minimum wage until it evaluates the impact of its own tax plans for low-income workers.

Gordon Brown will argue that the improved Working Families Tax Credit, which he plans to extend to single people, will boost the incomes of poor people more than any increases in the minimum wage.

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See also:

25 Aug 00 | Business
Unions demand higher minimum wage
15 Feb 00 | Business Basics
Minimum wage in the UK
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