pounds 3.60 pay minimum disappoints unions

A RECOMMENDATION to the Government later this month by the Low Pay Commission that the national minimum wage be set at pounds 3.60 an hour will attract denunciation and grudging acceptance in equal measure from both employers and unions.

One union leader, Rodney Bickerstaffe, general secretary of Unison, Britain's biggest union, said yesterday that the figure was disappointing.

Unison is seeking a rate of pounds 4.61 under a formula that would tie the minimum to male average earnings. "Coming to the end of the 20th century I don't believe that pounds 4.61 an hour is a lot to ask for," Mr Bickerstaffe said.

The commission, which has been deliberating for nearly a year, is also likely to exclude younger workers from the national minimum or recommend a lower level.

New ammunition for the exemption of young workers will be provided by a report due to be published next month by the Organisation for Economic Co-operation and Development.

A comprehensive study by the Paris-based think-tank of arrangements in a wide range of countries shows that a minimum wage for young people systematically reduces the level of employment in that age group. The number of job losses depends on the level of the youth minimum.

It will report that it is not enough to maintain just a small differential between the adult and youth rates, or to apply the youth rate just to those under the age of 18. A youth rate needs to be much lower and to apply up to the early or mid-20s if it is not to cost jobs.

The organisation is also concerned about how the Low Pay Commission will uprate the minimum wage to keep up with inflation.

Ministers will allow a period of consultation on the commission's recommendations with a view to legislation in the next parliamentary session and implementation in 1999. It is expected that small and medium-sized businesses - large companies overwhelmingly pay higher rates - will begin adjusting wages long before the statutory minimum passes into law.

The Conservative Opposition and some employers will inevitably predict a wave of job losses as a consequence of the pounds 3.60 floor to wages. Its impact on the economy however will also depend on the degree to which higher-paid employees seek to preserve their wage differentials.

The commission's rate of pounds 3.60 seems to split the difference between the TUC, which has called for a figure of more than pounds 4 and a submission from the CBI which indicated that it should be nearer pounds 3.20. While refusing to recommend a specific figure, the employers' organisation calculated that if old wage council rates, which once covered low-paid industries, were updated in line with inflation it would produce a wage of roughly pounds 3.20, which the CBI argued would have little impact on employment.

Union leaders are expected to express their reservations in a meeting with the Prime Minister this week which is scheduled to discuss proposals on a law to enforce union recognition where employees vote for it.

Union officials calculated yesterday that pounds 3.60 an hour - which translates into pounds 137 for a 38-hour week and more than pounds 7,000 a year - would mean a pay increase for 1.5 million workers.