Can we afford a national minimum wage as the recession continues to bite? STEPHEN LEWIS reports.

FIRST, the good news for low-paid workers. From October, the National Minimum Wage will increase.

Now the bad news: it will go up by only 7p an hour, from £5.73 to £5.80.

At a time when MPs of all parties are being hauled over the coals for their unseemly expenses claims, that doesn’t seem overly generous.

But at least the business secretary, Lord Mandelson, is proposing an increase. One Conservative MP, backbencher Christopher Chope, would like to see the minimum wage abolished altogether.

Or at least, he would like to see employees given the right to opt out of being paid the minimum wage which, since they might face the choice of a low-paid job or no job at all, would amount to pretty much the same thing.

Mr Chope’s private member’s Employment Opportunities Bill gets its second reading in Parliament on Friday.

There is no chance of it becoming law. But it was backed this week by East Yorkshire Conservative MP Greg Knight, who said at least it opened the door for a debate on whether “we should be more flexible in setting out wage levels for all workers.”

Small businesses have undoubtedly been hard-hit by the recession. But is there really an appetite to reduce or scrap the minimum wage? And what about that 7p increase? Is it an insult, or a meaningful rise?

There should be no question of abolishing the minimum wage, says trades unionist Brian Brock, York-based regional officer for the TSSA. And any opt-out system would amount to that. “People would be told you either opt out or you don’t have a job,” he said.

The minimum wage is an absolutely essential guarantee for low-paid workers, Mr Brock said. “I’ve been a full-time trades union official for 28 years and I can remember what it was like before the minimum wage, and what some people were earning. It was exploitation.

“We don’t want to go back to the old days where people had to tug their forelock and say ‘thank you, boss, for being so kind as to give me a job’.

“People should be doing a good day’s work for a good day’s pay.”

He’s not particularly impressed with Lord Mandelson’s proposed 7p rise. £5.80 an hour isn’t a great wage, he said. “People have to live on that. MPs are talking about spending much more than that on their expenses.”

Rosemary Suttill, manager of York CAB, is equally unimpressed. Like Mr Brock, she sees a minimum wage as essential. “It is so protective of people. It gives them some sort of security,” she said.

That is good not just for individuals on low wages, but for society as a whole, she pointed out. If the minimum wage were ever to be scrapped there may well be many workers who were offered such poor wages it would be better for them not to work at all and exist on benefits.

That is already happening, and without a minimum wage would increase. “That would be very bad for the economy.”

And what about the 7p rise? It simply doesn’t take account of rises in the cost of living, she said. In a barbed reference to MPs and their expenses, she added: “We are clearly seeing that people who are in command of the rules are able to manage rather better than people who are not.”

But what about York’s business community?

Tony Cherry, Yorkshire and Humber policy chairman for the Federation of Small Businesses, is in favour of the National Minimum Wage in principle. There was some concern when it was first introduced, he said. “But it has worked pretty well for most businesses.”

But businesses had been hoping that, in this year of recession, any increase in the minimum wage would have been frozen, he said. Even a 7p rise in the hourly rate would have an impact on firms already struggling with rising costs, such as business rates and fuel. “Surely it is more important for people to retain their jobs than get a pay rise?”

Amie Postings, general manager of The Grange Hotel in York and chair of the York Hoteliers Association, agreed. Hotels relied heavily on casual labour, which was paid at minimum wage rates, she said – and even a 7p rise would have a “massive impact.”

It would mean hotels had to adjust salaries at every level in order to main differentials, and so would have a knock-on effect on salaries far beyond the wages of casual staff themselves.

Hotels were already struggling to cope with rises in costs, she said. “The price of everything we need to operate has increased massively in the last 12 months.” She doesn’t think the increase in wages will necessarily lead to redundancies – but one upshot might be that some hotels seek to reduce costs by taking on fewer seasonal staff.

She, like Tony Cherry, is in favour of the minimum wage in principle. “But I don’t think there should have been an increase this year.”


The lowest legal levels of pay

At the moment, the minimum wage is:

• £5.73 an hour for workers aged 22 and over

• £4.77 an hour for 18 to 21-year-olds

• £3.53 an hour for 16 and 17-year-olds.

From October, these rates will increase to:

• £5.80 an hour for those aged 22 and over

• £4.83 an hour for 18 to 21-year-olds

• £3.57 an hour for 16 and 17-year-olds.