The introduction of a National Minimum Wage (NMW) was a flagship policy of the Blair government in 1998. It benefitted at least 1.5 million low-paid workers. It has recently been acknowledged as the most important and successful social policy initiative of the last thirty years.
The implementation of a NMW was opposed by the Conservatives, who asserted that it would mean extra costs for businesses and would cause unemployment. The Liberal Democrats argued for regional minimum wages (RMW), which would have meant lower rates in Yorkshire than in London.
More recently, 3500 employers have guaranteed a Living Wage, independently calculated to a level believed to be the minimum amount individuals require to get by. This is about £45pwk (£100+ in London) higher than NMW.
The NMW rates are reviewed each year by the Low Pay Commission, which makes recommendations for change to the government. Enforcement can either be by the individual employee, under the Employ-ment Rights Act 1996 or by Her Majesty’s Revenue and Customs (HMRC).
In 2013, new rules were introduced to "name and shame" employers who were paying less than the minimum wage.
Last year, the taxman (HMRC) found that nearly 100,000 individuals – a record high - were paid below the NMW by more than 2600 employers. This was 69% up on the previous year. The increase is almost entirely attributable to an increase in the number of proactive, ‘targeted’ investigations conducted by HMRC, as opposed to investigations arising from a worker complaint. But, due to a lack of resources, HMRC only investigate a fraction of jobs at risk of underpayment. So, a large number of underpaid jobs are likely to go undetected every year.
Then, recent research by the excellent staff of the House of Commons Library has found that unpaid overtime and travel time between jobs as well as deductions for uniforms pushed the underpaid group to between one and two million people.
Underpaid workers are more likely to be women than men, part-time rather than full-time, and employed in the private rather than the public sector. It affects workers of all ages.
Workers are entitled to the minimum wage whenever they are working, not just during their contracted hours. The most common causes of underpayment are failure to pay workers travelling between jobs, deducting money from pay for uniforms and not paying for overtime. A good, but shocking, example of this was came when an investigation in to Sports Direct revealed that workers were made to wait, unpaid, for a security check at the end of shifts.
The latest NMW rates should be announced soon for implementation from April.