Welfare Reform on the Web (October 2003): Minimum Wage - UK

RAISING THE RATE: AN EVALUATION OF THE UPRATING MECHANISMS FOR THE NATIONAL MINIMUM WAGE

S. Sachdev

Employee Relations, Vol. 25, 2003, p.405-415

Increases in the national minimum wage (NMW) in the UK have been erratic. This may be related to the electoral cycle. Drawing on experiences in the USA, the author argues that the lack of an adequate uprating mechanism may lead to:

• Avoidable and intense political lobbying
• Greater instability and uncertainty for low paying firms
• Unfairness to those on minimum wages who are at the mercy of the political process to maintain the value of their incomes.

He considers the possible form of any uprating mechanism in the light of the US and French experiences.