PRESS RELEASE 31 January 2000

Government undermines 'Welfare to Work' with Minimum Wage freeze

The Low Pay Unit today expressed its anger at yesterday's announcement by the Trade and Industry Secretary that there would be no increase in the level of the National Minimum Wage. Speaking on GMTV, Stephen Byers said that any increase could put Britain's booming economy at risk.

The Minimum Wage brought real increases in wages to around 1.5 million people without any evidence that it caused either inflation or job losses. In fact, many traditionally low paying sectors have seen employment growth. The decision to freeze the rate at £3.60 means that the nation's lowest paid workers will not benefit from the country's growing economic prosperity.

The Low Pay Unit argues that the rate of the National Minimum Wage should be reviewed on a predictable, regular and objective basis. That is why we have proposed the formula based on half male median earnings- currently £4.94 per hour. The NMW has already shown itself to be a vital tool in tackling the deep structural pay inequalities in the UK labour market. For the NMW to continue to have this impact it must at least keep pace with average earnings.

Director, Bharti Patel, said

"£3.60 per hour did not provide a living wage when it was introduced, and already its value has diminished. Failure to raise the level will mean that the working poor are losing out both in relation to benefit recipients and average earners. With means tested benefits automatically rising in line with RPI, the message that 'work pays' is being undermined.

Erratic, election driven increases send the message to low paid workers that they are a low priority for Government, whilst they see around them others enjoying the benefits of economic growth."

For further information contact Bharti Patel, Director, on: 020 7713 7616