The future of the minimum wage - The employer perspective


Learning and Work Institute is working with Carnegie UK Trust to explore the impact of increasing the minimum wage on workers, employers and the economy. Building on the evidence and in dialogue with workers and employers, we will explore the opportunities and risks of a higher minimum wage, while examining the implications for other key aspects of ‘good work’, including access, security, progression and training.

This is the second report in the series, looking into how employers reacted to the introduction of and increases to the minimum wage in the past, how they feel they will be able to handle planned future increases, and what support they might need. It builds on our first report, which focussed on the experience and perspective of low paid workers. The final report, out later in 2020, will bring together our findings with additional statistical analysis of the impact of minimum wage increases, and make recommendations for how minimum wage policy can sit within wider policy to reduce low pay and in work poverty. It will consider the analysis and policy recommendations in light of the coronavirus pandemic, and the UK’s upcoming exit from the European Union.

In light of the existing evidence, coupled with the huge impact of coronavirus on certain industries and the uncertain future of post-Brexit Britain, decisions around future NLW and NMW increases will need to be taken extremely carefully. While the government’s 2024 target may well still be achievable and important to support household incomes in the Coronavirus recession, increases in the wage floor must be balanced against the risk of adding to unemployment, and these increases should be matched by support for businesses to adapt. It is still vital, however, to consider the broader picture of the minimum wage, including the needs of those working at the wage floor.

In our final report, out later in 2020, we will bring together all the evidence collected from workers and employers, along with new economic analysis, to set out recommendations for the future of the minimum wage. We will explore the extent to which the minimum wage could boost incomes for low paid workers, and we will set out how increasing the wage floor could form part of a wider strategy to improve job quality and reduce in work poverty.