National Minimum Wage rise – a win for workers and employers

More than one million workers have benefited from our drive to ensure they receive at least the National Minimum Wage and we are determined that this should continue, writes employment relations minister Jim Fitzpatrick.

We are proud of the fact that it has made a real difference to the lives of millions of workers in sectors such as hospitality and cleaning for example, particularly women and part-time workers. The minimum wage has gone up by almost 30 per cent more than inflation since 1999, with the number of jobs increasing by over two million in the same period.

We have shown our commitment with sustained rises in the minimum wage. Year on year increases have protected some of society's most vulnerable people from exploitative rates of pay. We have just announced a rise, to £5.52 per hour, from October this year. We have also raised the rate for 18 to 21 year olds to £4.60 per hour.

The challenge now is to ensure that all employees who are entitled are receiving the minimum wage they should be.

The majority of employers are scrupulous and are paying the correct level of pay. But to be fair to these employers, they need to know that they are operating on a level playing field.

Readers of Network magazine will recognise this. In a changing labour market it is even more important that good employers are not put at a competitive disadvantage by those who underpay their workers.

This is why we are determined to crack down on anyone who avoids paying the minimum wage by introducing a new penalties policy.

The clear message that we want to send out is that if you don't pay, you will pay a fine. The current position is that an employer faces a minimum penalty of £224.70 per worker for not complying with an enforcement notice. The worst offending employers face prosecution, resulting in fines of up to £5,000 and a criminal record.

We are thinking of going one step further. We are currently considering the recommendation of the Low Pay Commission that we should introduce a penalty for any employer who is found to underpay the minimum wage, whether they pay back arrears when asked or not.

We will not stop there. The Chancellor announced in his pre-Budget report that the Government will increase the resources devoted to National Minimum Wage enforcement by nearly £3m a year.

These latest measures build on the existing hard work to ensure compliance across the country. In the past year alone our enforcement teams across the UK have helped over 25,000 workers get more than £3m back in unpaid wages.

The total amount recovered from employers since the introduction of the minimum wage in April 1999 is now over £22 million.

Our drive is to enable and help employers comply with the law, and to make sure that workers are aware of their rights. This is why we widely publicise changes to the National Minimum Wage rate in a variety of different languages, and provide guidance to employers and employees via the National Minimum Wage helpline, directgov, the DTI website and the HMRC website. Between 2005 and 2006, more than 61,000 calls were made to the National Minimum Wage helpline.

Over the last two years we have also targeted different traditionally low paid sectors with tailored publicity and advice followed by a period of enforcement and compliance visits from officers.

In 2005 the hairdressing sector was targeted and during the campaign 629 cases were registered and to date arrears of some £380,000 have been identified for 491 workers.

In 2006 we have been working with the childcare sector and we have just announced we will focus on hotels later this year, and the hospitality sector more broadly in the next year. These sectors often employ migrant workers. In the meantime HMRC will continue to use data from the Home Office's Workers Registration Scheme to select a number of migrant sector cases for a compliance visit.

We believe this package of measures is the right approach.

Enforcement of the national minimum wage supports both workers and good employers and makes the UK economy a fair place to do business.

The National Minimum Wage helpline number is 0845 6000 678.

Or visit:

www.usdaw.org.uk/campaigns/minimum_wage

www.dti.gov.uk/employment/pay/national-minimum-wage

www.hmrc.gov.uk/nmw

www.directgov.gov.uk

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© 2003 (USDAW) Union of Shop, Distributive and Allied Workers
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