Uncertainty over anniversary uprating of national minimum wage

In the run-up to the April 2000 first anniversary of the introduction of the national minimum wage in the UK, there is trade union disquiet at signals that government ministers have ruled out increasing its current rate in 2000.

In early January 2000, press reports suggested that the Labour government has decided not to uprate the national minimum wage (NMW) in April, the first anniversary of the NMW's introduction (UK9904196F), prompting protests from trade unions and Labour MP s who favour an increase. Although no official statement has yet been issued, ministers are said to believe that it is too early to assess the full effects of the NMW on the economy and jobs. April 2001 is seen as the most likely date for the first uprating of the NMW. The indications of the government's likely approach followed the submission to ministers of an evaluation of the NMW's impact drawn up by the Low Pay Commission. The Commission's report, and the response of the Department of Trade and Industry (DTI), are expected to be published shortly.

Union leaders are keen to establish the principle of the annual uprating of the NMW. In evidence to the Low Pay Commission, the Trades Union Congress called for the uprating of the NMW, currently GBP 3.60 an hour, from April 2000, whereas the Confederation of British Industry argued that any increase should be considered in the light of economic conditions (UK9910137N). In December 1999, some 60 Labour MPs signed a House of Commons motion calling for a "substantial" rise in the rate of the NMW, which they pointed out was set in June 1998 even though it did not come into force until April 1999.

In its recent review of the impact of the NMW, the Low Pay Commission was asked by ministers to consider whether 21-year-olds who are currently covered by the "development rate" of GBP 3.00 an hour for workers aged 18-21 should instead receive the adult rate, but was not specifically asked to make recommendations about uprating the NMW. Government sources are reported to have insisted that there has never been any suggestion of an increase in 2000. The Commission's June 1998 report recommended an hourly NMW of GBP 3.70 from June 2000, with an "initial" rate of GBP 3.60 from April 1999. The government accepted the GBP 3.60 rate but without making any commitment to raising the rate to the recommended GBP 3.70 in 2000 (UK9807135F).

Meanwhile, the most recent data on the enforcement of the NMW has been published by the government. The DTI released figures on 29 December showing that Inland Revenue enforcement officers had recovered underpayments to workers of over GBP 500,000 from April to November 1999 and had issued 66 enforcement notices on employers flouting the NMW. Over this period, 3,436 complaints were received under the NMW legislation. On 6 January, the DTI announced that the Inland Revenue had successfully secured all GBP 12,000 owed to a group of Thai women working in Scotland at Chicony Electronics, following newspaper reports claiming that they were being paid just GBP 0.96 per hour.

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