A think-tank report examined the length of time people remained on the minimum wage. It found largely two groups of people: young entrants to the job market who moved on to higher earnings quite quickly; and people who remained on minimum wage for a number of years. In 2012 the proportion of minimum wage workers who had not escaped minimum wage work in the previous five years was 17 per cent, compared with 12 per cent in 2004. Women were overrepresented in the group on minimum wage.
Source: Conor Dï¿½Arcy and Alex Hurrell, Minimum Stay: Understanding how long people remain on the minimum wage, Resolution Foundation
The government published its submission to the Low Pay Commission for its 2014 report on the national minimum wage.
Source: National Minimum Wage: Interim government evidence for the Low Pay Commissionï¿½s 2014 report, Department for Business, Innovation and Skills
A study examined the institutional diversity of minimum wage systems within the European Union. It said that the policy debate should be framed as a choice between alternative systems, rather than as a choice of any particular rate for Europe as a whole. A combination of sectoral minimum rates and high levels of collective bargaining coverage could, at least for certain outcomes, be regarded as constituting a functional equivalent to a binding statutory minimum wage at the national level.
Source: Stephan Kampelmann, Andrea Garnero, and Francois Rycx, Minimum Wages in Europe: Does the diversity of systems lead to a diversity of outcomes?, Research Report 128, European Trade Union Institute
A study found that promotion possibilities for low-paid workers were generally limited, and that minority-ethnic people especially faced multiple problems in getting promoted. Their difficulties included unequal access to opportunities for development, unclear information about training opportunities, and stereotyping. This was resulting in persistent in-work poverty, and a disproportionate number of ethnic minorities in low-paid work.
Source: Maria Hudson, Gina Netto, Filip Sosenko, Mike Noon, Philomena de Lima, Alison Gilchrist, and Nicolina Kamenou-Aigbekaen, In-Work Poverty, Ethnicity and Workplace Cultures, Joseph Rowntree Foundation
A paper examined the convergence and divergence of European minimum income schemes in recent decades. Despite a marked increase in the spread of minimum income schemes, cross-country variation in the level of minimum income benefits had remained markedly stable. But this hid starkly different country experiences, with some laggard countries showing marked increases, whereas others continued to fall short. Some of these pre-crisis gains had evaporated in recent years. In addition, a substantial number of countries had allowed a further erosion of their benefit levels – especially in the 1990s, but also in the 2000s.
Source: Natascha Van Mechelen and Sarah Marchal, Trends and Convergence of Europe's Minimum Income Schemes, ImPRovE Discussion Paper 13/11, Centre for Social Policy (Antwerp University)
A think-tank report said that the economic downturn had pushed a further 1.4 million employees' earnings below the 'living wage' – the rate deemed by the public as necessary for a basic standard of living. 4.8 million people (20 per cent of all employees) earned below the living wage in 2012 – up from 3.4 million (14 per cent) in 2009 at the height of the recession. Women, younger workers (aged 16-20), and all those working outside London and the south east were most at risk of being paid below the living wage.
Source: Matthew Whittaker and Alex Hurrell, Low Pay Britain 2013, Resolution Foundation
A paper examined the link between part-time work and poverty in European Union countries. The extent to which part-time work was associated with poverty varied considerably, far more so than for full-time workers. Involuntary part-time work clearly stood out as most problematic, although an increased poverty risk was not confined to it. Part-time work was most problematic where it was an inferior choice from the perspective of preferred working hours, earnings, and employment security. Moreover, part-timers sometimes faced a 'double income penalty', in that they were more likely to have lower earnings and reduced eligibility for certain social transfers – though in some countries the reverse was the case.
Source: Jeroen Horemans and Ive Marx, In-Work Poverty in Times of Crisis: Do part-timers fare worse?, ImPRovE Discussion Paper 13/14, Centre for Social Policy (Antwerp University)
A think-tank report said that some domiciliary care workers were being paid as little as £5 per hour – well below the legal minimum wage. Although headline pay rates were set at or above the national minimum wage of £6.19 per hour, in practice the workers often lost at least £1 per hour because they were not paid separately for the time spent travelling between appointments, and because providing decent care often took longer than the time allocated by the employer for each visit. This meant that, over the course of a year, a care worker who spent an average of 35 hours per week at work for 48 weeks would lose pay of more than £1,600.
Source: Matthew Pennycook, Does It Pay to Care? Under-payment of the national minimum wage in the social care sector, Resolution Foundation
A think-tank report said that trade union freedoms were essential to achieving greater earnings equality. It said that 'profound structural weaknesses' in the labour market had led to rising income inequality, the growth of in-work poverty, and stagnant wages. Trade unions and collective bargaining had potentially the most positive impact on reducing in-work poverty and income inequality.
Source: David Coats, Just Deserts? Poverty and income inequality: Can workplace democracy make a difference?, Smith Institute
A think-tank paper examined what role the national minimum wage and Low Pay Commission could play in reducing the incidence of low pay. It looked at whether there were practical ways in which they could be strengthened, without jeopardizing the success that had been achieved in the first 15 years of their existence.
Source: James Plunkett and Alex Hurrell, Fifteen Years Later: A discussion paper on the future of the UK national minimum wage and Low Pay Commission, Resolution Foundation
An article examined changes in labour market inequality, focusing on wage inequality, during the previous Labour governments (1997-2010). It looked at the changing role of labour market institutions, the decline of unionization, and the introduction of the national minimum wage in 1999.
Source: Joanne Lindley and Stephen Machin, 'Wage inequality in the Labour years', Oxford Review of Economic Policy, Volume 29 Number 1
An article said that there was a positive correlation within European labour markets between the proportion of full-time employees with earnings on the minimum wage and the extent of under-reporting of earnings in the economy. A high spike in the wage distribution at the minimum wage level was, in some contexts, a fiscal issue more than a labour market issue, and therefore it would be incorrect to consider a high spike as an indication of a binding minimum wage.
Source: Mirco Tonin, 'Underreporting of earnings and the minimum wage spike', IZA Journal of European Labor Studies, Volume 2
A paper examined how far in-work poverty in Europe was explained by country-level labour market institutions and welfare state polices. 'Micro-level' factors explained by far the largest share of the risk an employed person had of living in a poor household: nonetheless the prevalence of in-work poverty varied markedly across different countries, and the influence of country-level aspects was 'small but highly significant'. It was particularly important to foster not only the quantity of jobs available but also job quality.
Source: Dorothee Spannagel, In-Work Poverty in Europe: Extent, structure and causal mechanisms, Combating Poverty in Europe project (European Commission)
An article compared the evolution of earnings instability in Germany and the United Kingdom. There was evidence that the overall inequality of earnings in both countries had been rising in recent years, due to both higher permanent earnings inequality and higher earnings volatility. However, taking institutions of the welfare state and risk-sharing households into account, the volatility of net household income had remained fairly stable. Redistribution and risk insurance provided by the welfare state was more pronounced in Germany than in the UK.
Source: Charlotte Bartels and Timm Bonke, 'Can households and welfare states mitigate rising earnings instability?', Review of Income and Wealth, Volume 59 Issue 2
The coalition government announced that the national minimum wage would rise by 12p per hour for adults to £6.31 from October 2013 a nominal increase of 1.9 per cent, compared with retail price inflation of 3.2 per cent. The rate for young people aged 18-20 would rise by just 5p (1 per cent) to £5.03, and for those aged 16-17 by 4p (1.1 per cent) to £3.72. A recommendation from the Low Pay Commission that the rate for apprentices be frozen was rejected, and the rate was raised by 3p (1.1 per cent) to £2.68 per hour.
Source: National Minimum Wage: Government Response to the Low Pay Commissions 2013 Report, Department for Business, Innovation and Skills | National Minimum Wage: Low Pay Commission Report 2013, Cm 8565, Department for Business, Innovation and Skills, TSO
Links: Response | Hansard | DBIS press release | LPC report | LPC press release | BYC press release | CBI press release | Citizens Advice press release | IEA blog post | Labour Party press release | TUC press release | BBC report | Full Fact blog post | Guardian report | New Statesman report | UnionNews report
A paper examined the link between different institutional features of minimum wage systems and the minimum wage 'bite' in European countries. Evidence was found that systems with bargained sectoral-level minima were associated with higher Kaitz indices (the ratio of the minimum wage to the average wage of the working population) than systems with statutory floors: but also with more individuals actually paid below prevailing minima. Higher collective bargaining coverage could to some extent reduce this trade-off between high wage floors and non-compliance/non-coverage.
Source: Andrea Garnero, Stephan Kampelmann, and Francois Rycx, Sharp Teeth or Empty Mouths? Revisiting the minimum wage bite with sectoral data, Discussion Paper 7351, Institute for the Study of Labor (Bonn)
A paper examined trends in low-wage service employment across 19 European countries between 1992 and 2010 in order to establish whether its expansion and poor quality were both as inevitable and as inter-related as the literature suggested. It concluded that socio-economic changes were driving the expansion of low-wage service jobs and that this process led to a service 'underclass'.
Source: Moira Nelson, Low-Wage Service Occupations in Europe: An inevitable underclass?, Working Paper 3.7, NEUJOBS Research Project (European Commission)
A think-tank report said that nearly three-quarters of in-work benefit claimants (970,000 in total) were not looking for additional work. Benefit conditions should be tightened to force them to do more to increase their hours and earnings.
Source: Paul Garaud and Matthew Oakley, Slow Progress: Improving progression in the UK labour market, Policy Exchange
A new book examined the purpose and effectiveness of minimum wages in different European countries. It highlighted important national differences in the functioning of minimum wage systems and their integration within national models of industrial relations.
Source: Damian Grimshaw, Minimum Wages, Pay Equity, and Comparative Industrial Relations, Routledge
A think-tank report presented an economic analysis of the 'living wage'. It looked at its potential impact on labour demand; the potential costs for employers; which workers and families benefited most; and the fiscal savings to government. It called for a series of 'living wage city deals', under which some of the dividend to the exchequer from cities paying a living wage in the public sector would be recycled back to the local area, to support small and medium size businesses in moving away from low pay.
Source: Matthew Pennycook and Kayte Lawton, Beyond the Bottom Line: The challenges and opportunities of a living wage, Resolution Foundation/Institute for Public Policy Research
A paper examined the impact of taxes and benefits on work incentives, using a lifecycle perspective. Individuals experienced considerable variability in work incentives their lives, outweighing the variability across individuals. Work incentives varied dramatically depending on family composition, and most women experienced a number of different family types during the course of their lives.
Source: Mike Brewer, Monica Costas Dias, and Jonathan Shaw, How Taxes and Welfare Distort Work Incentives: Static lifecycle and dynamic perspectives, Working Paper 13/01, Institute for Fiscal Studies
A paper analyzed labour demand for low-skill/low-pay labour, in order to explore the potential employment trade-offs associated with moving to a 'living wage'. Cost increases would reduce employers' demand for young low-skilled employees in the private sector by approximately 300,000. The reduction in labour demand would be around 160,000, as employers substituted younger with more experienced workers.
Source: Rebecca Riley, Modelling Demand for Low Skilled/Low Paid Labour: Exploring the employment trade-offs of a living wage, Discussion Paper 404, National Institute for Economic and Social Research
Links: Discussion paper