Minimum wage

Between 16 and 20 per cent of London’s workforce earn less than the ‘living wage’ for the capital, a study for the Greater London Authority has found.

The report examines patterns of low pay in London, taking the living wage (currently calculated as £8.30 per hour) as the threshold for defining low pay.

Minimum wage policies based on a single national minimum rate are less effective than others at protecting low-paid workers, according to researchers in Brussels.

Researchers at the European Trade Union Institute divided countries into those whose minimum wage systems produce a ‘clean cut’ in the income distribution – like the UK’s – and ‘complex’ systems where many different minima coexist side by side.

Paying a ‘living wage’ is affordable for big companies in some sectors, including banking, construction, computing and food production, according to a new think-tank report. It calculates the average increase in the wage bill for listed companies in these sectors would be only about 1 per cent or less.

According to the report, the living wage in 2011 was £8.30 an hour in London, and £7.20 outside London. These figures are based on the cost of a basket of goods and services that different kinds of family need to reach a minimum acceptable standard of living. More than 6 million people earn less than those levels – around 1 in 4 workers. The report suggests that:

The level of the yearly uprating in the minimum wage has a direct impact on other low-wage employees, with large increases producing a positive impact on wage levels, argues a new paper from the University of York on the impact of the minimum wage. The paper sheds new light on the way employers’ wage-setting behaviour is affected by the legal minimum wage.