Member News
By Alan Jones - 29th December 2009
Over the festive season ePolitix.com is publishing some of the best articles and interviews of 2009 from our sister publication The House Magazine.
In June Alan Jones, industrial correspondent of the Press Association, reflected on the success of the national minimum wage.
Countries from Albania to Uganda have a national minimum wage, but nowhere is the statutory rate more fiercely debated than in the UK, which has just celebrated the 10th anniversary of the pay guarantee.
Business groups and unions clashed over whether the rate should increase this year because of the recession, with the government deciding on a modest 7p-an-hour increase from October, to take the figure to £5.80 for adults.
The rate for 18 to 21-year-olds will rise by 6p to £4.83, and by 4p to £3.57 for 16 and 17-year-olds.
Negotiations at the Low Pay Commission, which recommends the rate, were said to be fraught this year, while political debate has also been heated since Labour introduced the minimum wage in 1999, two years after winning power.
Ministers often champion the minimum wage as one of the government's major achievements, while recently a row over tips in bars and restaurants being used to top up wages led to action being promised to stop the practice.
Australia and New Zealand were the first countries to adopt a statutory wage in the late 19th century.
Legislation on some form of minimum wage is now in place in more than 90 per cent of countries, although laws vary between groups and ages of workers covered, the rate and whether tips can be counted.
The UK rate was not regarded as particularly generous when it was first introduced a decade ago, lagging behind a number of countries, but over the years it has moved up an international league table following regular increases, at a time when the recession has hit governments across the world.
Latest figures show that the UK rate is now one of the highest among OECD countries, although there are higher rates in countries including France, Australia and Holland.
The UK falls further down the league for youth rates, with Australia, Belgium, Canada, France, Greece, Ireland, Japan, New Zealand, Portugal, the United States and Spain all having higher youth minimum wages as a percentage of adult rates.
In some European countries, adjustments to the minimum wage are built into law, such as in France where rises in the consumer prices can trigger automatic increases, while in others, including Holland and Spain, adjustments are made every six months.
Western European countries such as Belgium, Holland, Luxembourg and France have the highest minimum wage, while Southern European countries including Greece, Malta, Spain and Portugal have lower rates.
The UK fares less well when the minimum wage is compared as a percentage of average wages, falling behind countries including Slovenia and Greece.
TUC general secretary Brendan Barber said: "We'd like to see the UK rate even higher in the chart some time soon. As soon as the good times return, our economy will be able to sustain a more substantial increase, with no negative impact on jobs."
An official at Unison remarked: "The UK minimum wage falls roughly in the middle of the table of EU countries, with our rate worth just under half the median wage compared to 63 per cent in France and 39 per cent in Spain.
"Evidence also shows that increasing the wages of the lowest paid at this time would actually galvanise local economies, as it would place disposable income directly in the hands of employees - who for the large part would spend salaries locally, bolstering local businesses."
A British Chambers of Commerce spokesman said: "It's important that the Low Pay Commission ensures fair pay, but it must continue to balance this against our ability to compete with countries that have lower, or even no, statutory minimum wage. The challenge is particularly tough during the current economic downturn, but the LPC seems to have got it right so far."
Trade unions across Europe have been pressing for bigger rises in the minimum wage to help stimulate depressed economies, while business groups have been arguing the exact opposite, leaving governments to make the decisions, often influenced by their political leaning.
Fresh debate in the UK will now centre on whether apprentices should have a minimum wage, with the Low Pay Commission asked to report to the government by next February, making the issue a likely hot topic ahead of the next general election.
Dods Parliamentary Communications Ltd