As the wage floor rises, there is always a danger that more people will slip through the cracksby Sarah O'Connor / January 30, 2019 / Leave a comment
You know a policy is successful when its former opponents steal it. The UK’s minimum wage law is a perfect example: introduced by Labour in 1998 at a cautious level, it has been seized on and supercharged by the Tories in the last few years. In an otherwise sluggish economy, the employment numbers have been surprisingly buoyant, and the big issue has switched from the quantity of work to its sometimes dubious quality. Raising the wage floor seems a fitting response to that. But to improve working life at the bottom of the labour market, it’s not enough to just make laws. You also have to enforce them.
There is no doubt the rising minimum wage has boosted pay for millions. Most employers, after all, do what they are told. But consider Leicester as a window into the policy’s patchiness. More than a thousand factories crammed into subdivided old buildings are supplying the UK’s booming online “fast fashion” retailers. I found in an investigation last year that the going rate of pay in many such places is about £4.25 an hour, far below the legal minimum for over-25s of £7.83. The illegality in the sector is so brazen that workers have concluded that no one is serious about their rights. “The government knows what’s happening in Leicester,” one worker said bleakly. “And that’s it. They don’t do anything.” David Metcalf, the government’s Director of Labour Market Enforcement, concurred in a report last year that lack of effective enforcement in Leicester had created a “perceived culture of impunity.”
Sub-minimum wages are far from rare in the UK. The Low Pay Commission estimated in 2017 that somewhere between 13 and 20 per cent of low-paid over-25s were receiving less than the supposed floor. The government has committed to raise the rate ambitiously until at least 2020. Indeed, this is its flagship policy to boost living standards for the working poor. It has also upped funding for HMRC, which is responsible for enforcement, and expanded the powers of the Gangmasters and Labour Abuse Authority.
But as the wage floor rises, there is always a danger that more people will slip through the cracks. Decent enforcement comes down to two things: resources to fund inspections and investigations,…