Two million UK employees affected by national minimum wage

Between 1.7 and 2.1 million employees are likely to be affected by the introduction of the national minimum wage in April 1999, according to an official analysis of the incidence of low-paid employment in the UK, published in December 1998

New research by the UK government's Office for National Statistics (ONS) uses data from the 1998 New Earnings Survey and the spring 1998 Labour Force Survey to produce an estimate of the number and percentage of employees likely to be affected by the introduction of the statutory national minimum wage (NMW) in April 1999 (UK9807135F). As well as estimating the aggregate impact of the NMW, the ONS has also analysed its impact by sex, full-time/part-time status, region, occupational group and industry division. The findings of the research are published in the December 1998 issue of the official publication Labour Market Trends.

Based on recommendations by the Low Pay Commission, the level of the NMW will be GBP 3.00 an hour for workers aged 18 to 21 and GBP 3.60 an hour for those aged 22 and over. Some 1.9 to 2.4 million employees (8.4% to 10.4% of employees) earned below these levels in the spring of 1998. Allowing for earnings growth in line with the forecast inflation rate of around 2.5% in the year to April 1999, the ONS estimates that some 1.7 to 2.1 million employees (7.4% to 9.1% of employees) will benefit from the introduction of the NMW.

The study also shows that:

  • women in part-time jobs will be the chief beneficiaries of the NMW. Over half (52%) of the those currently earning below the relevant NMW rate are women working part-time. A further 18% are women in full-time employment. By comparison, 19% of the low paid are male full-time employees and 11% are male part-time employees;
  • younger workers will also benefit disproportionately. The percentage of employees aged 18 to 21 estimated to earn below GBP 3.00 an hour (between 14.3% and 16.7%) is considerably higher than the percentage of employees aged 22 and over earning below GBP 3.60 an hour (8% to 10%);
  • the regions with the highest proportion of low-paid employees are the north-east of England, Northern Ireland, Wales and the south-west of England. Those with the lowest are London and the south-east of England; and
  • three occupational categories stand out as having a very high incidence of low pay - personal and protective services, sales and "other occupations". Roughly two-thirds of all low paid employees work in these occupations.

In terms of sector, hotels and restaurants have by far the highest percentage of low-paid employees while the highest number of low-paid employees work in the wholesale and retail industries.

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment