Public and Commercial Services Union

Introduction

PCS recognise the success of the NMW since it was established in 1999 and the real difference this has made to workers in the lowest paid sectors of the workforce. We note the amount will have increased by 59% from £3.60 to £5.73 in October, Starting from such a low base means that even a rise that looks good in percentage terms still means an hourly rate that is around the amount of a glossy monthly magazine. This compares to a national median rate of £11.03

The NMW has had a positive impact on the gender pay gap in the UK. This recognises the fact that many of those affected directly by the NMW are women.

Whilst negotiating for salaried staff, PCS have been keen to ensure that the minimum wage underpins starting salaries in the public sector. PCS represents both members in the public and private sector who are earning the minimum wage but also the staff enforcing the NMW in the HMRC.

Enforcement

Compliance Officers report that the legislation is a success with the vast majority of employers complying at least to some extent, and very large numbers of workers enjoying higher wages that they would otherwise as a result. Compliance Officers (CO’s) have not reported seeing any evidence of employers struggling or going under because of the wage bill, and see no reason to hold back on NMW increases citing that reason.

The policy of pitching NMW increases above price inflation has been entirely beneficial. CO’s report that there is evidence that the young worker under 18 rate in particular is set far too low with hardly any employers being forced to increase their wage levels.

Compliance Officers report that HMRC is not reaching all non-compliant Businesses and sectors, and It may be falling a very long way short. The experience of ethnic minority workers in small restaurants and take-aways is often of illegally low pay.

There is anecdotal evidence from Leicester that techniques of evading NMW in the clothing industry are moving into other sectors of the economy as well. Gangmasters are diversifying from areas covered by the GLA to other sectors bringing their unfair pay practices with them.

On current methods of working each additional NMW compliance officer could visit 60 to 70 employers per year, the majority will be failing to comply in some way and most of the non-compliers will have to pay arrears of NMW.

It would take a vast increase in officers before you would see any fall off in the returns. HMRC has yet to make use of the evidence of non-compliance that its PAYE investigators could pass on. Funding has not increased this year adequately to enable better policing of the NMW .

Additional funding allocated on the NMW would enable Compliance Officers to allocate more time to dealing with rogue employers who either do not pay the NMW or who may dismiss or victimise workers who have sought to assert their rights.

It would also allow more time to be allocated to those areas of employment currently little regulation or complaint regarding non-payment of the NMW because of the vulnerable nature of employment/employees- areas such as hand car washing or some areas of the media industry where ‘Internships or work experience’ are used as excuses not to pay the NMW. This is a growing and particular concern.

Employment Bill

The changes in the Employment Bill, which is still going through Parliament, will come in (hopefully) on 1 April 2009. They mandate formal proceedings and the imposition of penalties against all non-compliant employers. This is likely to lead to a massive increase in the number of appeals to Employment Tribunals, and a vast increase in workload for investigators.

Holiday pay

Additional funding would allow extra attention to be paid in particular in regard to the NMW and holiday pay and would encourage closer multi-agency co-operation in the cases of vulnerable workers.

Most employers who fail to pay NMW also cheat workers of some or all of their holiday pay. If a weekly pay packet is short of NMW it usually follows that a week’s holiday pay will also be inadequate (and that is in the cases where the employer actually pays holiday pay!). At present NMW compliance officers cannot even give advice or request employers to do the right thing on holiday pay and have no powers to enforce it.

Class action

Trades unions should be able to take cases for a group of workers underpaid and ‘representative cases’. Taking any ET case is stressful for the individual and off-putting. Group action makes the pressure less for the individuals concerned.

General increase

In this current climate of significant increases in the Retail Price Index and other measures of inflation PCS would strongly argue for an above inflationary increase in the National Minimum Wage (NMW) so that low paid members are better able to cope with increasing living costs.

Despite the slow down in the rate of national average earnings there is evidence that there needs be a substantial increase in the NMW rates this round. PCS policy is for an £8.25 per hour as a new minimum.

This figure reflects the dramatically increased living costs in the UK particularly over the past year and the disproportionate impact inflation in housing and utility costs have on low income households.

Many on the NMW will also qualify as in fuel poverty. £8.25 is still very close to two thirds of the median earnings seen as a low pay threshold and should be affordable to good employers.

Young person’s rate and the apprenticeship exemption

PCS members employed in the Education and Skills sector who work with young people are particularly keen to endorse long-standing policy to pay young workers adult rates. The current apprenticeship schemes devalue the work whilst forcing the young people to live on poverty rates.

It is imperative that the 18-21 rate is phased and the apprenticeship exemption is abolished to halt exploitation of young people by unscrupulous employers. Compliance officers have seen examples where a school leaver is entitled to the lowest rate of the NMW through the summer working as a Saturday girl in a hairdressers only to see their wages plummet to £2.00 per hour when they start an apprenticeship.

The recent tax band changes whilst welcome for many workers does disproportionally affect those disadvantaged by the abolition of the 10p tax band but who are unable to claim tax credit because of the under 25 age restriction. Some of those young people disadvantaged by the under 21 NMW rate are doubly disadvantaged.

National minimum wage

In the context of increasing Regionalisation rumours the PCS would like to state its policy of the single rate for the NMW with the possible exception of London as discussed in the recent IPPR report. There is little evidence to show diversity in living costs outside of London, it is important for the economy that a single rate applies to stop ghettoisation of certain areas with employers keeping rates down to unacceptable levels.

Calculation of rate

The other issue that can be a problem is the calculation of an hourly rate. In the civil service some of our members are on or close to the NMW and we have to be careful about how it is calculated in terms of salary.

To calculate the full-time rate the annual salary is divided by 52.2 and by gross hours per week figure (this will vary by employer or location). This is not the standard calculation for the NMW as defined by the NMW helpline some wording about clarifying the calculation of the rate could be helpful.