Summary of the editorial from IDS Pay Report 984, September 2007

Should the National Minimum Wage vary by region?

The Low Pay Commission, the body responsible for setting the level of the National Minimum Wage, has begun receiving evidence on the impact of recent increases in the NMW. These will inform its next report, to be published early next year, which will make recommendations on the next rise, due from October 2008.

One proposal being trailed is the possibility that the NMW could vary by region, with increases in the rate for London, but with reductions in other regions, such as the North East, Yorkshire, Wales and Northern Ireland. If the proposal is a serious one, it would represent a major shift in policy and practice relating to the NMW. For a start, the Low Pay Commission was established by statute to recommend only a national minimum, and primary legislation would be required to allow the body make regional recommendations of the sort being mooted.

But the key difficulty with such a view is that it bears little relationship to the reality of low pay. Where differences in earnings between regions exist, these are generally small. An analysis of hourly earnings (excluding overtime) for the lowest-paid decile in each region as a proportion of the UK average for this group, shows clearly that there is no statistically significant variations apart from London.

... the full editorial can be read in IDS Pay Report 984