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Subject:

Locking in the minimum wage

From:

Deborah Knight <[log in to unmask]>

Reply-To:

Deborah Knight <[log in to unmask]>

Date:

Thu, 19 Jul 2001 15:02:49 +0100

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (135 lines)

>Reply-To: "Catalyst" <[log in to unmask]>
>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
>MIME-Version: 1.0
>X-Priority: 3
>X-MSMail-Priority: Normal
>X-MimeOLE: Produced By Microsoft MimeOLE V5.00.2314.1300
>
>     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
>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
>     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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