Locking in Fairness: An uprating mechanism for the minimum wage

By Sanjiv Sachdev.

Published: July 2001

The government regards the introduction of a national minimum wage as one of the greatest achievements, and raising this to £4.20 is one of its "five pledges" for the second term. But the long-term value and impact of a minimum wage depends on an adequate uprating mechanism being established. Sanjiv Sachdev argues that the relative neglect of this issue has been a major omission on the part of the government and the Low Pay Commission.

Evidence from the US indicates that the lack of an adequate uprating mechanism may lead to avoidable political lobbying, greater income inequality, exacerbating poverty traps, greater instability and uncertainty for low paying firms, and is unfair on those on who near minimum wages whose incomes are held captive to the vagaries of the political process. Already increases in the UK minimum wage are following an erratic pattern that may be related to the electoral cycle.

The French system, on the other hand, has maintained the value of the minimum wage while retaining some political flexibility for the government. Sachdev suggests that the adoption of such a model for the UK could establish a new political consensus that future governments would find hard to break.

Sanjiv Sachdev is Senior Lecturer in the School of Human Resource Management at Kingston University, and was previously a research officer at UNISON. He has researched and published widely on low pay issues as well as on Public Private Partnerships and the Private Finance Initiative. Publications include Low Pay and the Minimum Wage, Institute of Employment Rights, 1998 (with Frank Wilkinson) and Managing in a Business Context, FT Prentice Hall, 2001 (with Huw Morris and Brian Willey). He also writes an occasional column for SocietyGuardian.co.uk.

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NEW! Read responses to this paper from Tony Lynes (National Pensioners Convention), Stuart White (Jesus College Oxford), Jim McCraken (North West Low Pay Unit), Paul Nicholson (Zacchaeus 2000 Trust), Richard Wilkinson (University of Nottingham Medical School), and Ann Black (Labour Party NEC).

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