05.07.13
Minimum wage ‘victim of its own success’
The UK is at risk of creating a two-tier labour market, chair of the Government’s Low Pay Commission has warned. Professor Sir George Bain is reviewing how the minimum wage and the role of the commission that sets it can be strengthened to prevent one in ten workers earning just over the minimum.
A study from the Resolution Foundation shows that 2.4 million jobs now pay within 50p of the minimum wage, or 10%. This rises to 22% among part-time workers and 42% in the hospitality sector.
The Commission is considering how certain sectors could afford to push up wages without job losses to create an “affordable wage”, and to set a clearer long-term view of where the minimum wage should go.
Sir George said: “My back still bears the scars from introducing the minimum wage so I don't need reminding how controversial it was. But in a way the policy has been a victim of its own success. The wide support means the policy has settled down into a premature middle age, with little thinking about how it could do more to tackle low pay.
“When we began our work in 1997, we saw jobs being advertised at 100 hours a week for £1 an hour. That sort of low pay is gone. But with one in five workers still earning below the living wage it's time to reflect on whether the design of the minimum wage is right for the next 15 years.
“We created the minimum wage to stop extreme exploitation, yet some employers now see it as the going rate for entry-level staff. That's not what it was supposed to do.
“With a single rate, it will always be hard to raise the rate because you're worried about employment in vulnerable areas. But minimum wages are ill-fitting garments, pinching hard in some places and leaving room in others. We need to ask whether there's more we could do to push up pay in sectors that could afford it.”
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