In the mid-1990s, the Labour Party in the United Kingdom made it clear that they would introduce a National minimum wage if they won the next election. Their objective was to use andNational Minimum Wage to help reduce poverty and income inequality. This led to much political and economic debate about the likely impact of a National Minimum Wage. Much of this focused on the employment in the UK. For example, in 1995 a former Conservative government minister, Iain Lang, said that a minimum wage set at £4.15 an hour would cost at least 950,000 jobs. Yet by March 2001, nearly two years after the introduction of an 'National Minimum Wage ' (in April 1999), the Low Pay Commission was able to conclude: "We were especially concerned about the possible negative employment effects of the minimum wage. Employment has continued to grow strongly since the introduction of the minimum wage, and there were no discernible adverse effects at the aggregate level." In fact, total employment increased significantly during the first two years after the introduction of the 'National Minimum Wage ' 1
Brief history of the National Minimum Wage
Winston Churchill first established wage Councils in 1909 to protect the pay of workers in the so-called "sweated industries". At their peak in the 1960s, the Wage Councils set minimum wages in some 60 sectors. After this, the number of sectors covered fell and in the early 1990s there were 26 remaining Wage Councils.
But in 1993, the Trade Union Reform and Employment Rights Bill abolished all of these. Thus, from 1993 there were no minimum wages in operation in the United Kingdom, except in agriculture. In 1997, the Low Pay Commission (LPC) was established to recommend to the Government a level for the initial rate of the National Minimum Wage. The LPC did a lot of research and spent a lot of time talking to trade unions and employers before making recommendations to the Government. At the start, there were large differences of opinion about...