Low Pay Commission hears evidence on National Minimum Wage

In October 1997, employers and unions submitted evidence to the newly-established Low Pay Commission, which advises the Government on the setting of Britain's first National Minimum Wage.

There has probably been no other UK industrial relations issue recently which has caused so much controversy as the National Minimum Wage (NMW), which the Labour Government is committed to introducing (UK9704125F). Debates continue to rage over issues such as what the rate should be, what its effects are likely to be and what should be the role of the Low Pay Commission (LPC) which has been appointed to advise the Government on such problems (UK9708158N). The debate continues, with one side putting forward an argument, only for someone else to argue exactly the opposite.

However, October 1997 probably marks a turning point in the debate, in that both side of industry - trade unions and employers - submitted evidence to the LPC in its first formal sitting. While both parties agree that the LPC should work on a permanent basis, they could not agree on what the employment effects of the NMW are going to be.

The Confederation of British Industry is aiming for a modest rate, arguing that even a rate of GBP 3 per hour could lead to job losses if differentials have to be restored. The Trades Union Congress, on the other hand, argues that there is no evidence that the NMW will have a devastating effect on employment. Noting that some unions have already been reaching deals for low-paid groups of more than GBP 4 per hour through collective bargaining, the TUC says that a minimum of somewhat above that figure is more than practicable.

Further debate was fuelled when, a week prior to the LPC meeting, a government minister mentioned the possibility of a differentiated rate or exemption from the NMW for people up to the age of 25 years. Further details of the current state of the NMW debate will be discussed in a forthcoming record.