CBI and TUC give evidence to Low Pay Commission

The Low Pay Commission is currently evaluating the impact of the introduction of the UK's national minimum wage and reviewing whether 21-year-olds should continue to be covered by the lower "development rate", and is due to report to ministers by December 1999. In October, the Confederation of British Industry and the Trades Union Congress submitted evidence to the Commission.

The national minimum wage, introduced in April 1999 (UK9904196F), has "not had a significantly adverse effect on the UK economy," according to evidence submitted by the Confederation of British Industry (CBI) to the Low Pay Commission. The UK's principal employers' organisation believes that the "downside risks" of the national minimum wage have been "contained", due to the "prudent level" at which it was set. The CBI remains opposed to the indexation of the national minimum wage, and argues that any proposed increase should be considered in the light of economic conditions.

The Trades Union Congress (TUC), in its evidence to the Commission, has called for the national minimum wage, currently GBP 3.60 an hour, to be uprated (by an unspecified amount) from April 2000. The TUC document says that there has been no evidence of job losses as a result of the introduction of the national minimum wage, and that in some low-paid sectors employment has actually risen.

The Low Pay Commission, which made recommendations to the government about the initial level of the national minimum wage (UK9807135F), has been asked to evaluate the wage's impact and to report to the Prime Minister and the trade and industry secretary by December 1999. In its terms of reference, the Commission is asked to review the position of 21-year-olds who are currently covered by the "development rate" of GBP 3.00 an hour for workers aged 18-21, and in particular whether they should be covered by the adult rate.

The CBI says that the current development rates for young people and trainees have been valuable, particularly in limiting the potential impact of the national minimum wage on small firms. The TUC, however, calls for the abolition of the GBP 3.00 per hour youth rate and for young people to receive the same rate as older workers. According to the TUC's evidence to the Low Pay Commission, the lower rate for young workers is unfair, distorts the labour market and undermines training incentives.

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