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Welfare Reform on the Web (April 2005): Minimum Wage - UK

NATIONAL MINIMUM WAGE

Low Pay Commission

London: TSO, 2005 (Cm 6475)

In 2003 and 2004 the minimum wage was increased faster than average earnings. Report analyses the impact of these significant upratings and considers the appropriate path for the minimum wage in 2005 and 2006. Analysis suggests that the upratings have been absorbed without adverse effects. Employment continues to grow in most low-paying sectors and the impact on wage bills and profitability appears sustainable. However, some businesses have found the significant increases of 2004 a challenge, particularly because of the consequences for pay differentials. The Commission has therefore erred on the side of caution and proposed a minimum wage increase only slightly above average earnings.

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