National Minimum Wage

National Minimum Wage
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(EEF), the Labour Research Department (LRD), Incomes Data Services (IDS) and XpertHR
(formerly IRS). All four generally give a similar picture on pay awards across the economy.
Using IDS data, we are able to break down pay settlements by low-paying sector. In general,
as shown in Table 2.6, pay settlements in the low-paying sectors have tended to broadly track
pay settlements in the whole economy. There have, however, been some differences across
low-paying sectors, with firms in hospitality (hotels, restaurants, pubs and leisure) awarding
higher pay settlements than those in retail or care services since 2008.
Table 2.6: Annual Median Pay Settlement, by Sector, UK, 2000-2011 a
Per cent Whole
economy
Low-paying
sectors
2000 3.0 3.0
2001 3.2 3.0
2002 3.0 2.8
2003 3.0 3.0
2004 3.0 3.0
2005 3.2 3.0
2006 3.0 3.0
2007 3.5 3.0
Care
services &
housing
Children’s
nurseries
Hotels,
restaurants,
pubs &
leisure
Retail
2008 3.5 3.0 3.0 3.0 3.2 3.0
2009 2.0 2.0 2.0 3.0 2.3 1.5
2010 2.0 2.0 1.0 2.5 2.0 2.0
2011 2.5 2.2 2.0 - b 2.6 2.0
Source: IDS (2011c).
Notes:
a. IDS did not disaggregate pay settlements by
b. Sample size too small to produce estimate.
individual sector p rior to 2008.
2.55 One of the features in pay settlements since the onset of the recession in 2008 has been the
increase in the number of companies implementing pay freezes. Very few companies had
frozen pay in the period from 1999-2008, but the proportion rose to around 40 per cent of all
awards in the depths of recession. Few of these pay freezes were in the public sector. Pay
freezes still accounted for around 10 per cent of pay awards in 2011, as they became more
common in the public sector. However, few pay freezes have been in the low-paying sectors.
2.56 A feature of pay reviews that does appear to have been affected by the minimum wage is
their timing. In 1999, when the minimum wage was introduced, fewer than 5 per cent of all
pay reviews in the low-paying sectors and in the whole economy were in October. By 2010,
that percentage had risen to nearly 20 per cent of all pay reviews in the low-paying sectors,
while it had only risen to about 6 per cent in the economy as a whole. Other companies have
also introduced two-stage awards, where the company retains its normal pay review date for
the majority of its workforce but makes a supplementary award to its low-paid staff in
October if necessary.