National Minimum Wage

National Minimum Wage
3.13 The low growth in earnings between 2010 and 2011, coupled with upratings of about 2 per
cent in the minimum wage, has meant that the bites of the minimum wage rates (their value
relative to median earnings) have continued to increase. Figure 3.2 shows that in April 2011,
the bite of the applicable minimum wage rate was 72.8 per cent for 16-17 year olds, and 79.7
per cent for 18-20 year olds. For workers aged 21 and over the bite rose by 1 percentage
point in 2011 to 52.6 per cent, having remained at about 51.5 per cent between 2007 and
76
2010. 4
Figure 3.2: Bite of the Minimum Wage at the Median, by Age, UK, 1999-2011
Bite of applicable minimum wage at median
earnings (per cent)
90
85
80
75
70
65
60
55
50
45
40
1999
2000
Largest
uprating
2001
2002
Introduction
of the 16-17
Year Old
Rate
2003
2004
2005
April of each year
16-17 18-20
2006
Start of
recession
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.
Notes:
a. The median for those aged 21 and over is compared with the adult minimum wage rate, which applied only to those aged 22 and
over between 1999 and 2010.
b. Direct comparisons before and after 2004, and before and after 2006, should be made with care due to changes in the data series.
3.14 The ASHE data show clear spikes in the earnings distributions for young people at each
of the NMW rates. We have noted in recent reports that employers appear to be making
increased use of the youth rates of the NMW to pay their younger workers. Figure 3.3 shows
that this trend has continued into 2011, with 7.2 per cent of 16-17 year olds paid at the 16-17
Year Old Rate of £3.64 in April 2011, the highest proportion since the rate was introduced in
2004.
4 Figures presented here on the bite of the NMW for adults differ from those presented elsewhere in the report, as they focus on
workers aged 21 and over, rather than those aged 22 and over.
2007
2008
21+
2009
2010
2011
90
85
80
75
70
65
60
55
50
45
40