Ten years on: the urgent need to enforce the national minimum wage
April 1st, 2009 by Krisnah Poinasamy Posted in labourrights
The national minimum wage (NMW) came into force a decade ago today. At the time, some predicted that rather than help those at the bottom of the pay scale, it would mean job losses for the very people the NMW was aimed at helping. They were proved wrong: the national minimum wage improved the lives of millions previously at the mercy of employers paying as low as 35p per hour. Some two million people saw their pay go up on 1 April 1999, as government established a pay floor for all.
Yet a combination of loopholes and poor enforcement have allowed unscrupulous employers to continue to exploit the most vulnerable of workers.
One common way to circumvent the NMW is to declare a worker self-employed, even if in practice they do not have the independence or control over their work patterns that would enable them to genuinely negotiate terms or wages. This situation, that of the ‘bogus self-employed’, can be seen time and again in sectors such as construction and agriculture.
Others get round the national minimum wage by paying piece rate. Homeworkers – predominantly women working from home doing jobs such as sewing and packing – are routinely exploited, with almost half paid below the NMW, and of those, two-thirds paid by piece-rate (PDF). In the hospitality sector, it is not uncommon to hear of chambermaids paid at £2 per room and then asked to clean a varying quota of rooms each day (PDF). It comes as no surprise that almost one in five in the hospitality sector are paid below national minimum wage, with the rate doubling for BME and migrant workers (PDF).
Many more employers, though, just don’t pay the national minimum wage, knowing that they are very unlikely to get caught. At present, the government employs only one hundred inspectors to ensure payment of the minimum wage. The average employer could expect a visit from HMRC once every 320 years. And though HMRC does respond to complaints from workers, these are unlikely to come from the most exploited, concerned about retributions from their employer.
As the recession bites, rogue employers – especially those in sectors acutely hit by the recession such as hospitality – will be more willing to cut wages to keep down costs. And those employed in vulnerable work will be less willing to complain for fear of losing their job at a time when unemployment is so high.
The Government’s response, which comes into force on Monday, will increase fines and prosecutions for employers that are caught, but does little to improve the chances of actually catching employers that break the law. This fragmented enforcement regime and the lack of guarantees for employees who blow the whistle on bad employers undermines the worthy goal of a national minimum wage for all.
3 Responses to “Ten years on: the urgent need to enforce the national minimum wage”
By Witheld on Apr 21, 2009
I have just blown the whistle on my employer for failing to pay sales staff the NMW. The directors got paid a percentage of the profit from the company. Some of the sales staff were effectively earning �3.28 before tax, the difference between this and the NMW was ploughed into the company as ‘profit’, therefore the directors were using our wages to bump up their salaries! I hope this means that the staff who have worked there since the NMW was introduced will benefit from a nice fat cheque courtesy of the compliance officers and it will help future staff from being unlawfully exploited. The company is a Newspaper group, amazing isnt it in this day and age, you would expect behaviour such as this from a sweat shop not a company with a media profile!
By Krisnah on Apr 21, 2009
Thanks for your comment and well done for blowing the whistle on your company. Sadly, the government relies upon whisteblowers like yourself rather than actively investigating abuses of the National Minimum Wage. As you can imagine, those who are exploited in this manner are also very unlikely to report the abuse for fearing of losing their job – especially at a time when unemployment has risen to its highest point in ten years. Your story just goes to show the need for more effective enforcement as there is no limit on who would be willing to break the law.
By saen on Nov 8, 2009
NMW is a bit of a joke really. I understand you have to have a minimum, but at least make it fair. Your comment above also highlight the money motivated dierctors.