Minimum wage reform

The Times - 19 Mar 2019
Sir, Paul Johnson describes the opportunities that are waiting to be seized by reformers (“Let’s not push minimum wage too far without studying the evidence”, Business, Mar 18). There are two ways of building on the success of the national living wage (NLW) in countering low pay.

First, a third of a million people who are paid the NLW work in industries where only a small proportion of the workforce is paid at this minimum hourly rate. There is likely to be room for the wage floor in those industries (dependent, of course, on companies’ size, profitability, and wage bill) to be raised slightly higher without causing unemployment.

Second, the government could require company remuneration committees to link pay increases at the top to certain multiples of the pay awarded to people at the bottom of the pile and, crucially, to include within this requirement the wages of outsourced workers — hundreds of thousands of people who are paid the NLW are employed in retail, hospitality, cleaning and maintenance. Under this proposal profit margins would be affected only in those sectors most able to afford a higher minimum wage; the smaller firms that directly employ the workers would be compensated in full through their contracts with those larger companies.

Frank Field, MP

House of Commons