Firstly, by not consulting the independent and tripartite Low Pay Commission (which had overall responsibility for recommending minimum wage changes) the decision indicates a move away from independent evidence-based decision making in public policy around tackling poverty and making work pay. Secondly, as the new wage rate is for workers aged 25 or older, not only is this discriminatory to younger workers but may also incentivise employers to replace older workers. Thirdly, the government’s pronounced living wage conflicts with an already established living wage (at £7.85 in 2014/15) of the Living Wage Foundation, a widely respected research and campaigning organisation. Fourthly, the government has simultaneously cut tax credits to workers from low-income households, so that to compensate the ‘national living wage’ should be set at £8.25. The misappropriation of the label for political purposes undermines the wider debate about in-work poverty.
This paper will consider the specific impact of the new ‘national living wage’ on wage structures and employer strategies in low paying sectors, alongside parallel changes to the tax and welfare system.
