Low Pay and advising the UK government on the National Minimum Wage and the National Living Wage

Summary

Professor Sarah Brown of the Department of Economics became a Low Pay Commissioner in 2015, and is one of the nine members of the UK Government’s Low Pay Commission (LPC) advising the government on the rates of the National Minimum Wage (NMW) and advising on the path of the National Living Wage for those aged 25 and over towards the target of 60% of median hourly pay by 2020.

Graphic of Low Pay Commission Rates

The Low Pay Commission

The Low Pay Commission (LPC) was setup in 1997 to define the National Minimum Wage and recommend its introductory level. It was designed to tackle the worst extremes of low pay.

In the 2012 report the LPC states “Our aim in making our recommendations each year is to help as many low-paid workers as possible without any significant adverse impact on employment or the economy.” National minimum wage: Low Pay Commission Report 2012.

The LPC is independent of government and is made up of three independent commissioners, three with employer experience and three with trade union experience.

A National Minimum Wage of £3.60 an hour was introduced in 1999 for those over 22 years old and with lower rates for those aged 18-21 and 16-17 years old.

When the NMW was introduced, two major concerns were that it would result in unemployment and wage inflation. Research generally has suggested these concerns have not materialised. There has been little evidence of an adverse impact on employment levels in the lowest paid areas and wages above the minimum wage have not spiralled. The NMW therefore has widely been perceived as a success.

The LPC draws on four main sources of evidence: analysis of data on pay, the labour market and competitiveness; evidence from stakeholders and experts; visit programmes across the UK; and academic research.

Sarah Brown has recently acted as an external advisor to a project on ‘an international comparison of minimum wages and labour market outcomes’ by the National Institute of Labour Studies, Flinders University, for the Australia Fair Work Commission.

References

Low Pay Commission website

Low Pay Commission blog