One in nine UK workers to be paid minimum wage by 2020, study shows
The proportion of employees in the UK earning the minimum wage will double to over 10% in the next five years, according to a report published by the Resolution Foundation.
The report shows that, when the UK government first introduced the minimum wage in 1999, it was set at a cautiously low rate and consequently paid to only one in 50 workers.
This figure has grown to one in 20 today, following a series of increases to the minimum wage, and is expected to rise to one in nine workers (3.2 million people) by 2020. The figure will be even higher for workers in the private sector, according to the report.
The UK’s minimum wage is currently set at £6.70 for workers aged over 21. From April next year, a new higher rate of £7.20 will be introduced for over-25s; this is set to increase to £9 by 2020.
Adam Corlett, economic analyst at the Resolution Foundation, said that: “Given the scale of the change, government must now work closely with the Low Pay Commission and employers to ensure the policy is a success. It’s also important that businesses offer low-paid staff more opportunities for promotion and progression so that they don’t get stuck on the wage floor.”
The economic risks and benefits of minimum wage legislation are controversial. IZA World of Labor author David Neumark argues that introducing or raising minimum wages reduces the number of jobs available to lower-skilled workers, and that minimum wages do not necessarily benefit the poorest households.
Similarly, our author Daniel Hamermesh argues that minimum wages have small negative effects on employment, albeit while raising earnings for those low-wage workers who remain in work.
Read more on this story at the Guardian. The Resolution Foundation’s report, Low Pay Britain 2015, can be found here.
Related articles:
The minimum wage versus the earned income tax credit for reducing poverty by Richard Burkhauser
Employment effects of minimum wages by David Neumark
Do minimum wages induce immigration? by Corrado Giulietti
Who benefits from the minimum wage—natives or migrants? by Madeline Zavodny
Do labor costs affect companies’ demand for labor? by Daniel S. Hamermesh
Find more IZA World of Labor articles on wage setting here