Welfare Reform on the Web (December 2004): Minimum Wage - UK

SMALL FIRMS AND THE NATIONAL MINIMUM WAGE: IMPLICATIONS FOR PAY AND TRAINING PRACTICES IN THE BRITISH PRIVATE SERVICE SECTOR

J. Heyes and A. Gray

Policy Studies, vol.25, 2004, p.209-225

Article assesses the impact of the National Minimum Wage on small firms in the British service industry sector. Drawing on a combination of survey and interview data, the study examines how firms' pay and training practices have been affected by the introduction of the National Minimum Wage and subsequent changes in the level at which it is set. Study found little interest in paying the reduced "development rate" wage, particularly to adult workers. Employers who were aware of the existence of development rates, believed that offering them would make staff recruitment and retention more difficult, and were also reluctant to provide accredited training. Main strategies for offsetting the increased costs caused by minimum wage implementation included price increases, staff reduction, and reducing hours of work.