Network Journal Issue 04

The NMW – future implications considered

Are there any further plans to increase the minimum wage?

Yes. The Government has accepted the Low Pay Commission's recommendation that the adult rate be increased to £4.85 an hour, in October 2004, and the development rate, 18 to 21 year-old, be increased to £4.10 an hour from the same date.

What impact will this have on Usdaw agreements?

There are a number of Usdaw Agreements, primarily in the retail sector, where the lowest recruitment or starter rate, and some where the lowest rate itself, is currently the £4.50 adult NMW rate. These will see increases of 7.8 per cent to £4.85 an hour. If the same cash differentials with the next highest grade are maintained, we are looking at increases of a slightly lower, but nevertheless significant, amount for workers. In this respect, 2004 will be the year that the NMW really did begin to push retail pay upwards.

What will be employers' response to this?

It is difficult to say, except that it will be varied. Some employers will use the NMW as the anchor to support their wages system. Some will feel that they do not want to be tarnished with the brush of being seen as a company that pays some of its workers the NMW and will have its lowest rate paying slightly above the NMW.

Some, of course, will take the opportunity to review their whole grading structure through things such as merging the lowest grades and having fewer grades.

There may even be others who will deliberately want to set rates significantly above the NMW, with a view to being seen as a model employer setting decent wages and conditions for its staff. Each company will deal with the NMW in its own particular way.

One thing though is certain. There is a lot of hard work and potentially difficult negotiations ahead.

Won't employers' pay the adult rate at 22 with a lower rate for 18 year olds?

This is, of course, how the NMW operates. However, with one exception, no retail company has talked of introducing a lower payment for 18 to 21 year-olds.

Employers do seem intent, so far at least, on having their adult rate paid at 18, and for that rate to be at least that which applies for adult workers aged 22 under the NMW. The one exception, Woolworths, has a lower recruitment rate for 18 to 21 year olds, paying the NMW for these ages, which lasts for a period of six months. Whether others try to follow suit will only emerge during negotiations over the coming year.

Won't our members expect to be paid more than the National Minimum Wage?

Yes, and rightly so.

The NMW is primarily designed to protect the wages of those workers in establishments with little or no union presence, and who are not covered by collective bargaining.

It is this argument we will be using to try and get our members on rates of pay in excess of the NMW. We remain confident that, in the vast majority of our agreements, members will be on rates of pay above the NMW.

It must also be remembered that being covered by a collective agreement is about more than just wages. It is about all the other terms and conditions of employment, such as holidays, sick pay and family friendly policies, that are negotiated alongside wages.

Will all anniversary dates be moved to October?

October is, of course, the anniversary date of the Minimum Wage and when any increases become effective from.

However, the announcement of such increases can be at any time during the preceding six to nine months. That is why there will be little pressure to move anniversary dates to October, particularly in those companies whose pay scales are primarily above the NMW.

However, for those companies whose pay structures closely resemble the NMW, there may be some isolated moves towards moving the anniversary date to October. However, we can expect companies doing this to be the exception rather than the norm.

Won't we be pushing for a maintenance of differentials across all grades?

Not necessarily.

This will depend on the stance of the negotiating committee of the companies concerned. Although, we will not necessarily be pushing companies to reflect NMW increases throughout their wages structure, it may happen anyway.

The need of companies to maintain a grading structure, often built as a result of a technical, objective exercise, may in fact lead some employers to maintain differentials.

However, the most likely outcome is a squeezing of differentials at the lower end of the grading structures, which the negotiating committees of the companies concerned may feel is the price worth paying for substantially increasing the pay of the lowest paid.

Will our lower-paid members get two pay increases a year?

This means the negotiated one in the first half of the year and the statutory one in October. The aim is to avoid this because we will often know what the NMW will be from October at the time of the negotiations.

Our aim is to ensure the new wage structure after the negotiations takes this into account. However, in some cases, employers who have part of their pay structure as the NMW may well hold out and refuse to pay any statutory increases until they have to.

Other employers will seek a further review, nearer October, to see if they can afford to pay rates above the NMW at the time of its increase. We have accepted such an approach with varying degrees of success in the past, and will do so in the future.

Are there any plans for young workers to be covered by the National Minimum Wage?

We hope so.

There is a consultation exercise underway by the Low Pay Commission looking at the case for a NMW for 16 and 17 year-olds. Usdaw has submitted a detailed case as part of this submission, outlining why young workers need the same protections over wages as their adult counterparts.

This included the detailed results and examples of our own survey of young workers' wages, showing rates as low as £1.25 an hour being paid to 16 and 17 year-olds. We have called for an 'under 18' NMW rate based on 80 per cent of the age 18 rate.

We have also given oral evidence to the Low Pay Commission to back-up our case. The Low Pay Commission will make its recommendations to the Government in February 2004. If it recommends a Minimum Wage, and the Government accepts this, a NMW for 16 and 17 year-olds will become law in October 2004.

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