The toxic politicising of the National Minimum Wage

Publication Date02 October 2017
Pages785-789
DOIhttps://doi.org/10.1108/ER-04-2017-0072
AuthorWilliam Brown
SubjectHR & organizational behaviour,Industrial/labour relations,Employment law
The toxic politicising of the
National Minimum Wage
William Brown
Faculty of Economics, Cambridge University, Cambridge, UK
Abstract
Purpose After 15 years of success ful operation, the British Low Pay Commissio nsmanagementofthe
National Minimum Wage was threatened in 2015 by the governments introduction the National Living
Wage. The purpose of this pa per is to consider the underlying pr inciples of previous minimum wa ge fixing,
and the additional think ing of the Living Wage Foundation and the revie w of the issue by the Resolution
Foundation.
Design/methodology/approach The paper draws on the 2016 reports of the Commission to argue that
the two statutory wages are unavoidably interlinked and are tied to incompatible criteria.
Findings The paper concludes that the predicted eventual impact of the National Living Wage on the
labour market will be unsustainable.
Research limitations/implications The paper is relevant to minimum wage research.
Practical implications The paper is relevant to minimum wage policy.
Social implications The paper is relevant to low pay policy.
Originality/value The paper provides original analysis of minimum wage policy.
Keywords Social partnership, Living wage, Minimum wages, Wages councils
Paper type Conceptual paper
Will Britains National Minimum Wage (NMW) be killed by its own success? Despite the
extreme scepticism that greeted the introduction of Britains first universal statutory
minimum wage in 1999, it was quickly accepted. Its success owed much to the politically
independent, social partnership constitution of the Low Pay Commission (LPC) that
designed and ran it, and to the rigorous attention to evidence with which they operated.
After 15 years, this was put at risk by increased political interference. The first threat
came when the Labour Partys unsuccessful election manifesto for 2015 promised to fix
the NMW by decree. The threat became real when, later that year, Conservative
Chancellor Osborne announced the level at which a new minimum wage for those aged
25 and over, which he called a National Living Wage (NLW), would be introduced
from April 2016. Have the Commission, and consequently the NMW, been fatally
compromised?
This question gets to the heart of what is inherently a very political economic policy.
The factual basis for answering it lies in the two reports that the LPC have published since the
then Chancellors announcement. The first was produced in March 2016 (Low Pay Commission,
2016a). The second came in November 2016 after the additional shock of the Cameron
Governments fatal gamble on the European Union referendum (Low Pay Commission, 2016b).
In common with previous LPC reports, these are substantial, written with great care and
Employee Relations
Vol. 39 No. 6, 2017
pp. 785-789
Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-04-2017-0072
Received 1 April 2017
Revised 18 May 2017
Accepted 29 June 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
© William Brown. Published by Emerald Publishing Limited. This article is published under the
Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and
create derivative works of this article (for both commercial and non-commercial purposes), subject to
full attribution to the original publication and authors. The full terms of this licence may be seen at
http://creativecommons.org/licences/by/4.0/legalcode
The author is gratefulfor the comments of George Bain,Tim Butcher, David Metcalf and JackieScott,
none of whom are responsible for any factual errorsor opinions expressed.
785
Toxic
politicising of
the NMW

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