The National Minimum Wage: further reflections

The Government appointed a Low Pay Commission to advise on the level of the initial rate, and subsequently accepted all the Commission’s recommendations in principle, while taking a more cautious line on young workers. The National Minimum Wage will make a real difference to around two million low‐paid workers, but without significant extra cost to businesses – an addition of around 0.6 per cent to the UK wage bill. Some critics have argued for a higher initial rate, based on a mechanistic formula. But a rate which takes no account of prevailing economic circumstances or the dynamic nature of the labour market will not help low‐paid workers. It is also important to listen to employees and employers, the low paid and the low paying and reflect their views. The Low Pay Commission, which embodies the principles of social partnership, played a key role in this process.