Minimum Wage: The UK needs a major reform


The UK is increasing its minimum wage by 19p an hour to £6.50 – and is in need of major reform.

And who had the audacity to say this?

Oh, just the man who set it up 15 years ago – Professor Sir George Bain.

According to Sir George, the minimum wage policy has become a “blunt instrument” and that many employers could now afford to pay their workers much more. If not for the minimum wage.

If you set it at the ‘living wage’, which is about £7.65 an hour, you would cause massive unemployment in areas like retail and social care,” admits the Prof. Yet he adds there are only about five sectors where this is true. For the rest of society, there are a whole range of sectors where you could easily afford to pay more than the minimum wage.

To review how the minimum wage can be improved without raising unemployment – is a perennial issue for employers. Fears of heavy job losses when it was introduced 15 years ago were not borne out.

Prof George said the minimum wage had lifted most people out of extremely low pay but it had not had the upward “ripple effect” that many expected. That is to say, the rest of society didn’t get a wage increase because of this.

As a result, many workers earned just above the minimum, but still too little to get by.

In some sectors, such as parts of retail, the minimum wage had become the going rate.

In February 2014, British Business Secretary Vince Cable said he had accepted a recommendation (from the Low Pay Commission) for the minimum wage to increase by 3%. This is the first time in six years the rise will be higher than inflation.

Secretary Cable also made a push for all companies to consider helping their staff to share in the fruits of an improving economy. “I urge businesses to consider how all their staff – not just those on the minimum wage – can enjoy the benefits of recovery”.








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