Fifteen years later: A discussion paper on the future of the UK National Minimum Wage and Low Pay Commission
5th July 2013
In 15 years the UK National Minimum Wage (NMW) has evolved from a bold and experimental labour market intervention into a permanent and generally uncontroversial tool of economic policy. The Low Pay Commission (LPC), enshrined in law in 1998 to recommend the rate of the NMW, has won widespread support, with its decisions endorsed by a solid academic consensus that the NMW has boosted pay without causing unemployment. Yet sitting awkwardly alongside the success of the NMW is the scale of low pay in contemporary Britain. Although extreme, exploitatively low pay has been nearly abolished, one in five workers still earn below £7.49 an hour (two thirds of median pay), just £13,600 a year for working full-time and too little to afford a basic standard of living. This proportion has risen steadily over time and is markedly higher in the UK than in comparable maturing economies.
This paper launches a major new project at the Resolution Foundation that will consider what role the UK’s National Minimum Wage and Low Pay Commission could play in its next fifteen years in reducing the incidence of low pay. The core of the project will be a high-level, expert panel to review the future of the NMW and LPC, chaired by Professor Sir George Bain, the founding chair of the LPC, working with some of the UK’s leading labour market economists and policy experts. The project will ask whether there are practical ways in which the NMW and LPC could be strengthened to tackle low pay more generally while, crucially, not jeopardizing the success that has been achieved to date.
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