The Minimum Wage, 10 years on
1st April 2009
Today, the National Minimum Wage is 10 years old. Putting in place a legally enforceable minimum wage was one of Labour’s most important early decisions in Government.
It was a decision that was not always popular or supported by all parties. I remember well the dire predictions by the new Conservative opposition after 1997 that the new minimum wage would ruin the British economy, and of course it did not, but instead led to the protection of working conditions for millions of people in low paid jobs.
We are now hearing some of those same siren voices again. I recently had to oppose one of Southampton’s former Conservative MPs, Christopher Chope (now the MP for Christchurch and chair of the influential Conservative 1922 committee) when he put forward a Bill in Parliament to abolish the minimum wage.
It turns out the arguments used by opponents of the minimum wage have not changed a great deal over the last 10 years. They still say businesses could employ more people if they paid them all poverty wages; government should not interfere in wage agreements made between ‘freely consenting adults’ (no matter how unequal their bargaining power) and so on.
So it is worth repeating now what was said when the minimum wage was first introduced. The minimum wage has not cost jobs- in fact over 2 million jobs were created after the minimum wage was introduced. And as we all now know, what has caused lasting damage to the world’s economy most recently was not fair pay for people at the bottom, but excessive and unregulated bonuses for people at the top.
Nearly one million low paid employees, two thirds of them women, benefit from the National Minimum Wage and see their wages increase every time it goes up. Indeed it is not just the existence of the minimum wage that is important; it is that it has kept its value over the last 10 years and in some years actually increased at a rate faster than that of average earnings.
This is in sharp contrast to the years before 1997, when pay was as low as £1.20 per hour. Someone on that wage working a 40 hour week would only have earned £48 in a week. With the minimum wage, they would be earning £229 in the same time.
As well as increasing the minimum wage year on year, the government is coming down hard on employers who duck their legal obligation to pay it. Labour’s new Employment Act- now law- means employers who con their staff out of the minimum wage can now face an unlimited fine.
Further changes are also under way to revise the current minimum wage rules on tipping, to ensure that in the future, tips will always be paid on top of the Minimum Wage, and will not be used to make up someone’s basic salary.
It’s a matter of fairness and common sense. Whenever a tip is left, most people expect it to go to the staff member in addition to their pay, not to go through the payroll to make up the Minimum Wage.
This move will benefit workers in service industries across Southampton, people we all rely on, but who often don’t have the strongest voice. Changing the rules will build on the success of the Minimum Wage and be a step forward for decency and fairness in the workplace.
Originally published by the Southern Daily Echo
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