National Minimum Wage

Chapter 2: The Impact of the National Minimum Wage
bottom decile had increases in line with price inflation, whereas those in the upper part of the
distribution had wage rises greater than those at the median (and above average wage
increases). Since 1998, those at the bottom of the earnings distribution have had much
higher increases than those in the middle of the distribution. However, the increases at the
bottom have moderated significantly since 2004.
Figure 2.15: Annualised Growth in Hourly Earnings for Employees Aged 22 and Over, by
Percentile, UK, 1992-2011
Annualised change in earnings (per cent)
9
8
7
6
5
4
3
2
1
0
-1
5
10
Lowest
decile
15
20
25
30
35
40
1992-1997 1998-2004
45
50
Median Highest
decile
Percentile of gross hourly earnings excluding overtime distribution (adults aged 22 and over)
55
60
65
70
75
80
85
90
95
2004-2010 2010-2011
Source: LPC estimates based on New Earnings Survey (NES), April 1992-1997, and ASHE: without supplementary information, April
1999-2004; with supplementary information, April 2004-2006; and 2007 methodology, April 2006-2011, standard weights (NES
unweighted), including those not on adult rates of pay, UK.
Note: Direct comparisons before and after 1997, before and after 2004, and before and after 2006, should be made with care due to
changes in the data series.
2.47 Over the year to April 2011, those employees in the bottom decile had wage rises greater
than those at the median. However, those between the 15th and 40th percentiles experienced
little or no growth in wages between April 2010 and April 2011. Those at the top experienced
the largest increases.
Pay Gaps
2.48 We saw in Figures 2.4 and 2.14 that particular groups of workers (women, disabled people,
ethnic minorities, migrants, and those with no qualifications) are more likely to be in
minimum wage jobs. The extent of the difference in pay between these groups and their
counterparts who are less likely to be in minimum wage jobs can be measured by looking at
pay gaps (the proportional difference between the earnings of two groups). We tend to focus
on the median pay gaps for full-time workers, as they allow closer comparison of like-withlike
and are less affected than the mean by outliers in the earnings distribution.
9
8
7
6
5
4
3
2
1
0
-1
41