Why the UK’s minimum wage is being called the ‘most successful policy of a generation’

When the minimum wage was introduced in the UK 25 years ago on April 1, 1999, the subject provoked heated debate. Up to 2 million people were at risk of losing their jobs, according to the Conservative Secretary of State for Employment (1990-1992) Michael Howard. The Association of Convenience Stores warned of the “significant knock-on impact.” “The Labor party is trying to kick away the ladder of opportunity for many people who wish to climb it,” said Conservative MP John Redwood. Economists were sharply divided.

A quarter of a century later, it’s the “single most successful economic policy in a generation,” according to the Resolution Foundation, a British think-tank. Not only has unemployment not risen at all (currently standing at 3.9% in the UK), but the measure is now the subject of political consensus.

Initially introduced at the low amount of £3.60 an hour, or 47% of the median wage at the time, the minimum wage rose by 10% on Monday, April 1, to £11.40 an hour, or two-thirds of the median wage . This minimum hourly wage, equivalent to €13.40, now exceeds the French minimum wage, which stands at €11.65. And the increase has not resulted in employees being paid less. Only 5% of employees are paid this minimum, a far cry from France’s 17%. “There were concerns,” Minister of State for Enterprise Kevin Hollinrake admitted, but later said they were unfounded.

One of the reasons for its success is because of the cautious way in which the new wage was introduced. In the face of fierce debate, to say the least, Tony Blair’s government not only set the minimum wage at a very low level (only 2% of employees were affected at the outset) but also set up an independent commission made up of experts from trade unions, employers and academics to determine its level each year.

Political turnaround

“It’s an excellent example of social dialogue, and that’s one of the things that particularly gave us the confidence to support the creation of the minimum wage,” said Rain Newton-Smith, head of the Confederation of British Industry, the main employers’ organization , a body originally hostile to the minimum wage’s creation. The government took another step of caution by making the minimum wage lower for younger workers, with a lower floor for those under 18, another for those 18-20 and a third for those over 21 (initially set at 23).

Finally, British authorities have carried out lax surveillance on whether the minimum wage is respected. In the early years, it was estimated that almost half of all employers did not respect it. Even today, a quarter of employers fail to comply.

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