National Minimum Wage

Chapter 2: The Impact of the National Minimum Wage
Figure 2.13: Hourly Earnings Distribution for Employees Aged 21 and Over, by Five
Pence Band, UK, 2011
Jobs held by workers aged 21 and over (per cent)
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Those paid less than the
forthcoming October 2011 NMW
(1,419,000 or 5.8%)
Those paid less than the NMW
in April 2011
(233,000 or 1.0%)
NMW in April
2011 (£5.93)
Those paid at the NMW in
April 2011 (737,000 or 3.0%)
NMW in
October
2011
(£6.08)
under 5.50
5.50
5.55
5.60
5.65
5.70
5.75
5.80
5.85
5.90*
5.93*
5.98*
6.00
6.05*
6.08*
6.13*
6.15
6.20
6.25
6.30
6.35
6.40
6.45
6.50
6.55
6.60
6.65
6.70
6.75
6.80
6.85
6.90
6.95
Gross hourly earnings excluding overtime (£)
Source: LPC estimates based on ASHE, 2007 methodology, low-pay weights, including those not on adult rates of pay, UK, April 2011.
Note: * Five pence bands except where stated otherwise (bands labelled by minimum pay amount).
2.37 The trends over time in these numbers are shown in Table 2.2. For consistency with previous
years, the figures in the table are restricted to those aged 22 and over. Further, the pay band
width at the minimum wage is ten pence as there are concerns regarding the quality of
precise estimates prior to 2004. Since 2003 the numbers paid below the minimum wage
have consistently been around 0.9-1.0 per cent (or 200,000-240,000).
2.38 The numbers paid at the minimum wage tend to increase in line with the increase in the
minimum wage. For example, the large jump in 2002 was a consequence of the large
uprating in October 2001. However, except for that large uprating, the numbers paid at the
minimum wage were fairly stable in the period from 2001 to 2006, ranging from around
2.0-2.5 per cent (400,000-550,000). There was then a step increase to around 3.0 per cent
(700,000-730,000) between 2007 and 2010. There was then a further large increase in the
latest data, for April 2011. The numbers now paid at the minimum wage are approaching
1 million (or 4.0 per cent of the employee workforce) using the ten pence band definition.
2.39 The numbers paid less than the forthcoming rate are also in part dependent on the extent of
the forthcoming increase in the minimum wage. From 2004 to 2008, just over 5 per cent or
around 1.2 million workers were paid less than the forthcoming rate. The smaller increases
recommended during and immediately after the recession led this to fall below 1 million in
2009 and 2010. However, these numbers have risen back to almost 1.3 million as a result of
the 2.5 per cent October 2011 uprating. The number is particularly high in 2011 as the
uprating in the adult rate of the NMW spans the threshold of £6.00, which is a commonly
paid hourly wage, received by over 211,000 adults aged 21 or over in April 2011.
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
37