Introducing a minimum wage

Nowadays the national minimum wage is broadly accepted as part of UK policy, but it was highly controversial in the run-up to its introduction in 1999. Business leaders, politicians and several economists warned that such a policy could destroy up to two million jobs.

Researchers Alan Manning, Stephen Machin and Richard Dickens at the ESRC Centre for Economic Performance (CEP) provided crucial evidence to the Low Pay Commission, showing that there was no indication that a minimum wage would lead to large-scale job losses. The commission subsequently recommended that the policy was introduced, and the minimum wage came into force in April 1999.

A 2007 CEP assessment of the impact of the minimum wage showed that it had raised the real and relative pay of low-wage workers, narrowed the gender pay gap and positively influenced pay for one in ten workers.

The research was also cited prior to the introduction of minimum wage in Hong Kong in 2011, where it is estimated to benefit around 10 per cent of the working population. Germany followed suit with a national minimum wage in 2015, after a debate where the CEP findings were referenced.