The TUC’s recommendation on the main rates of pay
This paper sets out the TUC’s response to the Low Pay Commission’s current inquiry. The LPC is will be making recommendations to government on the National Minimum Wages (NMW) rates that will apply from 1 April 2018.
The TUC’s response argues for strong increases in the NMW rates and for better enforcement.
The National Minimum Wage is a key plank in the incomes of many low paid workers and their families. While it alone cannot perform all of the heavy lifting of preventing family poverty, it can make a real difference.
The need for that difference is striking. Research by the Joseph Rowntree Foundation published this year showed a working family on the National Minimum Wage with two kids would still not reach the level of income required to achieve a minimum acceptable standard of living. Even more strikingly, official statistics show that in 2015/16, the majority of households living below the poverty line were in working families.
In this submission we make the economic case for why increases in the National Minimum Wage are both affordable and desirable. It is also important to remember the broader case for developing the NMW as strongly as possible, which is that workers deserve decent rates of pay that allow them to live a decent life. A wealthy country like the UK should be able to put an end to in-work poverty.
Our call for higher minimum wage rates rests on the following economic and labour market evidence
The economy has, so far, survived the impact of the Brexit vote
However, this economic performance has not translated into higher wages, except where the bottom rates have been pushed up by the NMW.
Low wages are not only bad for workers but could also pose risks to the wider economy
Higher rates of the National Minimum Wage need to be enforced to be meaningful. While we have welcomed the additional resources put into NMW enforcement over the course of the year, there is clearly more to do. The TUC estimates, on a conservative basis, that underpayment affects at least 250,000 workers. HMRC action helped just over a fifth of this number last year.
Priorities to ensure everyone receives the pay they are entitled to include:
The NMW and insecure work
The TUC understands that Matthew Taylor’s review of modern employment practices will make a number of recommendations around how the national minimum wage and the Low Pay Commission could help to address insecure work. With the Commission’s permission, we will submit a separate note on these proposals once we have had a chance to consider them.
 Joseph Rowntree Foundation (2017) A minimum income standard for the UK, 2017 https://www.jrf.org.uk/report/minimum-income-standard-uk-2017
 DWP (2017) Households Below Average Income: An analysis of the UK income distribution: 1994/95-2015/16 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/600091/households-below-average-income-1994-1995-2015-2016.pdf