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Minimum wage Wednesday, 31 March, 1999, 10:50 GMT 11:50 UK
High hopes for fair pay
British industry and its workforce are bracing themselves for the introduction of Britain's first national minimum wage. The BBC's Industry Correspondent Stephen Evans asks whether their hopes and fears about its impact will be realised.

Implementing a national minimum wage is a big deal on all fronts.

Minimum wage
The full extent of how much difference it will make to many lives has for a long time taken second place to political debate.

But now that those broad arguments about principal are over, the detail of what the measures will mean can begin to emerge.

On the receiving end

Two million people in the UK - about a twelfth of all workers - will get rises of about 30%. Nearly all of these people are in what you might call the basement of the economy.

They switch between very low-paid occupations and no occupation at all. This has been called a "no pay - low pay" cycle.

Bar staff should benefit
Professor David Metcalf of the London School of Economics did much of the number crunching regarding the minimum wage for the government's Low Pay Commission which suggested the rate of 3.60 per hour.

His findings are that a third of all those adults earning less than 3.60 an hour (the minimum wage for adults from 1 April) are cleaners, sales assistants and bar staff.

Half of all the low paid are in these occupations plus care assistants in old people's homes and kitchen staff.

Geographically, the low-paid are concentrated in a few areas. One in ten workers in Wales, Northern Ireland and North East England will have a rise because of the minimum wage.

London, which has the some of the best pay in the country, will be little affected.

Paying heed

It will not be the sort of measure that employers would be wise to ignore. Enforcement officers will call on firms - either on spot-checks or after complaints.

Prison: The serious end to ignoring the minimum wage
If pay is not raised to the minimum, employers face penalties of 7.20 per employee per week plus back-pay.

Fines increase to a prison sentence for wilful non-compliance.

The political debate was dominated by the argument over the long-term economic effects.

It questioned whether people getting more than the market dictated would lose their jobs.

It also asked whether other staff in an organisation would want more if the pay at the bottom went up.

For example, if those who clean the supermarket get more, will the check-out staff want extra to maintain the difference with those below them?

Treading carefully

The Low Pay Commission thinks it has been cautious. Its members cite the Bank of England in support because it is not seen any effect of the measure on inflation.

The Bank of England has given its backing
Some firms may well lose staff, but the best bet is that it will not be a widespread effect.

The Low Pay Commission is treading carefully. Once the dust has settled, it will do detailed studies on the effects.

Its members know that if Britain's first ever statutory National Minimum Wage does not work at what they think is a lowish level, it will be discredited and abolished.

They feel they have one chance to get it right. On that, they are probably right.

Stephen Evans finds out what the workforce thinks
Links to more Minimum wage stories are at the foot of the page.

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