The National Minimum Wage has been a long contested entity. This is because, as far back as the beginning of the 20th Century, there have been proponents for its introduction. It took under the National Minimum Wage Act 1998 for it to be introduced. The reception of the minimum wage was seen as economically damaging, because it would limit employers ability to engage staff (Economist, 1997). A similar argument was presented by the Economist in 1998, where it stated that a national minimum would “help some poor families. But they also hurt many, especially those with a teenager trying to enter the labour market” (Economist, 1998) The rationale is that the national minimum wage would only help those already in the workforce, but as it increases the costs of the employer then there would be a reduction of jobs.
In 2001, the Economist reported the debate over the introduction of the minimum wage. This debate identified that the minimum wage had not affected the rate of employment (Economist, 2001). However, the opposing view identified that the rate of employment is the same, but hours of employment are less (i.e. a net reduction) (Economist, 2001). However, there is no clear indicator of which studies are correct. A third approach to the debate is that overly high minimum wages will be damaging (Economist, 2001).
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It is this third approach that seems to be the most appropriate approach in 2012, because although the debate remains the same (Economist, 2012). The inference is that a modest (or maximised) minimum wage will do no harm at the worst and at the best benefit the economy (Economist, 2012). Thus, the attitude in the 21st Century is that a liveable minimum age is beneficial, but this should not be so high it limits economic growth.
- The Economist, (1997). Labour’s wage policy: Minimum sense, 3 April 1997.
- The Economist, (1998). Not so fair pay – Politicians in Britain, Ireland, France and America want to establish or increase minimum wages. This may not help the working poor. 25 June 1998.
- The Economist, (2001). Debating the minimum wage: When governments put a regulatory floor under wages, does that destroy jobs? An update on a long-running dispute. 1 February 2001
- The Economist, (2011) The argument in the floor. Evidence is mounting that moderate minimum wages can do more good than harm. 22 November 2012
- Figure B: The Development of the National Minimum Wage in the UK from 1998 to 2013 (data from Low Wage Commission)
