The impact of the Minimum Wage in the South West

Low Pay Unit Report - April 1999

Executive summary

Britain's first ever NMW came into force on 1 April 1999, at £3.60 for workers aged 22 and above, and £3.00 for 18 to 21 year olds. This report, commissioned by Unison, estimates its impact on the South West region, using official statistics and a Jobcentre survey.

Analysis of the Labour Force Survey showed that a tenth of all employees in the region were earning less that the minimum wage in the period before its implementation. This figure included: one in four workers in the personal and protective services (eg. Care workers, security guards) and one in five sales workers. It also included a large number of workers across all sectors: the public as well as the private sector; those with jobs in hotels, catering and the retail trade as well as in education, health and public administration. The majority of those earning below the NMW were women.

The South West has a persistent problem of low pay. Average earnings in 1999 were 10% lower than in Britain as a whole. This was reflected in the number of vacancies found in job centres advertised at less than the minimum wage - 42% of vacancies in Truro and Plymouth.

The report found that the introduction of the NMW would have a significant effect in the South West - but that the problem of low pay and in-work poverty would not be solved. Large numbers of workers in all parts of the region were earning just above the NMW at the time of its introduction, and were thus unable to benefit due to the low rate at which it was set. The report concluded that there was a real danger that the NMW would become not a minimum rate for unskilled workers or for those starting new jobs, but the going rate for large parts of the South West's workforce.