National Minimum Wage

Chapter 2: The Impact of the National Minimum Wage
Table 2.1: Bite of the Adult National Minimum Wage at Various Points on the Earnings
Distribution for Those Aged 22 and Over, UK, 1999-2011
ASHE without
supplementary
information
ASHE with
supplementary
information
ASHE 2007
methodology
Data
year
(April)
Adult
NMW
(£)
Lowest
decile
Adult minimum wage as % of
Lowest
quartile
Median Mean Upper
quartile
Upper
decile
1999 3.60 83.9 65.1 45.7 36.6 30.4 21.1
2000 3.60 81.2 64.2 45.4 35.7 29.8 20.6
2001 3.70 80.3 63.0 44.2 34.7 29.0 19.9
2002 4.10 85.2 67.5 47.2 36.5 30.8 21.0
2003 4.20 82.4 65.8 46.5 35.9 30.5 20.8
2004
2004
4.50 84.9 67.6 47.5 37.2 31.3 21.4
4.50 85.6 68.3 48.1 37.7 31.6 21.7
2005 4.85 88.0 69.9 49.4 38.5 32.3 22.1
2006
2006
5.05 87.5 69.9 49.4 38.4 32.3 22.1
5.05 87.5 70.0 49.7 38.5 32.5 22.3
2007 5.35 89.2 71.7 51.0 39.6 33.6 22.9
2008 5.52 89.7 71.6 50.6 39.2 33.2 22.8
2009 5.73 89.6 71.7 50.7 39.8 33.3 22.9
2010 5.80 89.7 71.9 50.9 39.6 33.2 22.9
2011 5.93 91.2 73.4 51.7 40.2 33.9 23.2
Source: LPC estimates based on ASHE: without supplementary information, April 1999-2004; with supplementary information, April
2004-2006; and 2007 methodology, April 2006-2011, standard weights, including those not on adult rates of pay, UK.
Note: Direct comparisons before and after 2004, and before and after 2006, should be made with care due to changes in the data
series.
2.27 The bite in the low-paying sectors, and in small and medium-sized firms, is much greater than
in the economy as a whole. In contrast to the pattern observed above, the bite in the lowpaying
sectors and in small, especially micro, firms continued to increase between 2007 and
2010. The bite among the low-paying sectors has increased further in 2011.
2.28 Figure 2.8 shows that between 1999 and 2011 the NMW for workers aged 22 and over
increased on average by just over 4 per cent each year, compared with earnings growth of
about 3 per cent in the low-paying sectors, and 3.6 per cent in the non low-paying sectors.
Examining annualised earnings growth before and after the onset of the recession, we can
see that between 1999 and 2007 there was very little difference between the low-paying and
non low-paying sectors, although both were over 1 percentage point below the annual
increase in the NMW. However, since 2007 annual earnings growth in the non low-paying
sectors has been almost 2 percentage points a year higher than in the low-paying sectors.
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