AVERAGE EARNINGS, MINIMUM WAGES AND GRANGER‐CAUSALITY IN AGRICULTURE IN ENGLAND AND WALES
| Author | P. J. Dawson,Richard Tiffin |
| DOI | http://doi.org/10.1111/j.1468-0084.1996.mp58003001.x |
| Date | 01 August 1996 |
| Published date | 01 August 1996 |
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 58,3(1996)
0305-9049
AVERAGE EARNINGS, MINIMUM WAGES
AND GRANGER-CAUSALITY IN
AGRICULTURE IN ENGLAND AND WALES
Richard Tiffin and R J. Dawson*
I. INTRODUCTION
Since 1993, when Wages Councils were abolished, agriculture remains the
oniy industry in the UK covered by minimum wage legislation. Two
recent International Labour Organisation conventions covering the terms
and conditions of agricultural workers have been denounced by farmers,
thereby bringing into focus the continuation of the Agricultural Wages
Board (AWB). This paper examines the relationship and direction of
Granger-causality between average earnings and minimum wages for
regular whole-time males in England and Wales for 1948-93.
The Agricultural Wages Act (1948) established the AWB which is
empowered to fix, inter alia, minimum wage rates, the length of the
standard working week (prescribed hours), and overtime rates for agricul-
tural workers. While negotiations on the AWB are held at national level,
negotiations also take place on the farm between farmer and worker so
that individual earnings usually exceed prescribed AWB rates. Lund et al.
(1982, p. 8) cite two reasons. First, the employment contract between
farmer and worker may specify fewer 'basic hours' than those prescribed;
any additional work is overtime. Contractual overtime may be specified in
addition to non-contracted overtime. Thus, hours worked may exceed
prescribed hours and even part of the latter may be paid at overtime
rates. Second, hourly wage rates, for both prescribed hours and overtime,
may exceed AWB minima and there may be additional payments for
piecework and bonuses. The difference between actual earnings and the
minimum wage, known as the 'premium', has been widening over the
post-war period suggesting that earnings are determined in the labour
market and not by the AWB. The efficacy of AWB minimum wage
legislation in influencing actual earnings is thus brought into focus.
Two previous studies examining the effect of AWB minimum wage
legislation have reached conflicting conclusions. Lund et al. (1982), using
*We are grateful to Peter Dolton, Ronnie Macdonald and Martin Robson for comments
on an earlier draft. 435
© Blackwell Publishers 1996. Published by ßlackwell Publishers, 108 Cowley Road, Oxford 0X4 uF,
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