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>From: "Catalyst" <[log in to unmask]>
>To: "Catalyst" <[log in to unmask]>
>Subject: Locking in the minimum wage
>Date: Mon, 16 Jul 2001 09:05:06 +0100
>Organization: Catalyst
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> N e w s f r o m C a t a l y s t 1 6 J u l y 2 0 0 1
>Included in this mailing: 1. LOCKING IN THE MINIMUM WAGE - new Catalyst
>Working Paper published at www.catalyst-trust.co.uk
>--------------------------------------------------------------------------------
>----------------------------------------------------------------------------- 1.
>LOCKING IN FAIRNESS: AN UPRATING MECHANISM FOR THE MINIMUM WAGE Sanjiv
>Sachdev, Kingston University A Catalyst Working Paper July 2001 Catalyst
>is today warning the government not to 'play politics' with the incomes
>of the low paid and argues that the minimum wage could suffer the same
>fate as the basic state pension and 'wither on the vine' without an
>established uprating mechanism that maintains its value against average
>earnings. The paper, 'Locking in Fairness: an uprating mechanism for the
>minimum wage', is written by Sanjiv Sachdev, a Senior Lecturer at
>Kingston University and former Unison researcher. Among the paper's
>findings are:
>
> * that the increases in the minimum wage of non-election years 2000 and
>2002 are not enough to prevent the minimum wage falling behind the
>general rise of average earnings * that the increase announced in
>March 2001 during the run up to the general election was several times
>greater than increases of non-election years, suggesting that the
>government may be using timely minimum wage increases as a 'carrot' to
>gather otherwise lukewarm support from key constituencies such as the
>trade unions * that the absence of an uprating mechanism for the
>federal minimum wage in the USA has been a major contributor to
>worsening poverty and inequality in that country * former US
>Secretary of Labor Robert Reich described the absence of an index
>mechanism as 'Washington's dirty little secret', creating an endless
>cycle of unproductive political lobbying and horse-trading that we may see
>replicated in the UK * evidence from the US suggests that the lack of
>an uprating mechanism builds instability and uncertainty into the stock
>market as firms are unable to anticipate and plan ahead*
>
> The author recommends that instead of following the American path the
>government looks to France where an uprating system that combines
>automatic and discretionary elements has succeeded in maintaining the
>value of the minimum wage over time. Martin McIvor, Catalyst Research
>Officer, said: "The government has shown a great concern for creating
>stable policy frameworks insulated from political interference to allow
>business to plan for the long term. But when it comes to securing the
>incomes of the low paid none of these considerations seem to apply. There
>is a danger that this oversight could undermine the lasting value of one
>of the government's greatest achievements, the institution of a national
>minimum wage." The paper can now be downloaded in full from the
>Catalyst website www.catalyst-trust.co.uk/paper1.html. An executive
>summary follows this mailing. An article based on the paper,
>'Minimum wage needs bit of French dressing', appears on the economics
>page of today's Guardian.
> -------------------------------------------------------------------------------
>------------------------------------------------------------------------------ C
>a t a l y s t
>PO Box 27477
>London SW9 8WT
>Telephone +44 (0)20 7733 2111
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>' p r a c t i c a l p o l i c i e s f o r t h e r e d i s t r i
>b u t i o n o f w e a l t h , p o w e r a n d o p p o r t u n i
>t y '
>-------------------------------------------------------------------------------
>------------------------------------------------------------------------------ E
>DITORIAL BOARD: Roy Hattersley (Chair), Tony Atkinson, Marilyn Baxter,
>John Beishon, John Chesshire, Nick Cohen, Gordon Colling, Bernard Crick,
>Sylvia Denton, Meghnad Desai, John Edmonds, Larry Elliott, Ivor Gabor,
>Sue Himmelweit, William Keegan, Isobel Lindsay, Ruth Lister, Doreen
>Massey, George Monbiot, Bill Morris, Dave Prentis, Hilary Wainwright,
>Richard Wilkinson, Fiona Williams DIRECTOR: John Underwood
> Locking in Fairness: an uprating mechanism for the minimum wage A
>C A T A L Y S T W O R K I N G P A P E R Sanjiv Sachdev July 2001
>Executive summary · This paper examines the issue of uprating
>the minimum wage. It argues that this issue is nearly as important as the
>level of the minimum wage, but one that is relatively neglected. Without
>such a mechanism, the value of the minimum wage will fall over time. It
>maintains that Britain lacks an adequate uprating mechanism and outlines
>some consequences of this. · It argues that increases in the
>UK minimum wage have an erratic pattern that may be related to the
>electoral cycle. The increase announced in March 2001 is ten times
>greater than the 2000 increase and five times greater than the increase
>due in 2002. Both the 2000 and 2002 increases are, or are likely to be,
>below the general rise in average earnings. · Drawing upon
>experience in the United States, it argues that the lack of an adequate
>mechanism may lead to: avoidable political lobbying; greater income
>inequality; exacerbating poverty traps; greater instability and
>uncertainty for low paying firms; unfairness to those on or near minimum
>wages whose wages are held captive to the vagaries of the political
>process. · It considers the possible form of an uprating
>mechanism with an overview of the US and French experience. It argues
>that any uprating mechanism must not maintain the value of the minimum
>wage in relation to inflation but also to those of more highly paid
>workers. · It argues that the UK should adopt an approach
>similar to that of France. This has maintained the value of the minimum
>wage while retaining some political flexibility for government. The
>full text of this paper can be downloaded from the Catalyst website at
>www.catalyst-trust.co.uk . Hardcopies available on request from 020 7733
>2111.
> -------------------------------------------------------------------------------
>------------------------------------------------------------------------------ C
>a t a l y s t
>PO Box 27477
>London SW9 8WT
>Telephone +44 (0)20 7733 2111
>e-mail: [log in to unmask]
>www.catalyst-trust.co.uk
>' p r a c t i c a l p o l i c i e s f o r t h e r e d i s t r i
>b u t i o n o f w e a l t h , p o w e r a n d o p p o r t u n i
>t y '
>-------------------------------------------------------------------------------
>------------------------------------------------------------------------------ E
>DITORIAL BOARD: Roy Hattersley (Chair), Tony Atkinson, Marilyn Baxter,
>John Beishon, John Chesshire, Nick Cohen, Gordon Colling, Bernard Crick,
>Sylvia Denton, Meghnad Desai, John Edmonds, Larry Elliott, Ivor Gabor,
>Sue Himmelweit, William Keegan, Isobel Lindsay, Ruth Lister, Doreen
>Massey, George Monbiot, Bill Morris, Dave Prentis, Hilary Wainwright,
>Richard Wilkinson, Fiona Williams DIRECTOR: John Underwood
>
Deborah Knight
CSE/Capital & Class Business Manager
25 Horsell Road
London N5 1XL
(Tel/fax: 0207 607 9615
website: www.cseweb.org.uk)
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