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Welfare Reform on the Web (August 2008): Minimum Wage - UK

Johnson to raise minimum wage at City Hall

D. Hencke

The Guardian, July 10th 2008, p. 4

Boris Johnson is planning to increase the minimum wage for hundreds of thousands of Londoners to 7.40 an hour. The new minimum wage will apply to all staff employed by the Greater London Authority and related bodies, including Transport for London.

Why has the British national minimum wage had little or no impact on employment?

D. Metcalf

Journal of Industrial Relations, vol. 50, 2008, p. 489-512

The minimum wage which was introduced in Britain in 1999 has raised the real and relative pay of low wage workers, narrowed the gender pay gap and now covers around one worker in ten. However, in spite of extensive analysis there is little or no evidence of any impact on employment. The explanations for this include reductions in working hours rather than staffing levels, offsets via the tax credit system, so that the public purse subsidises employers, increases in the relative price of goods and services in industries affected by the minimum wage, failure by employers to comply and a reduction in the profits of firms employing low paid workers.

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