Some minimum requirements for the low pay body

The idea behind the Low Pay Commission, for which the bill to establish it was due in yesterday’s Queen’s Speech, has been vociferously opposed by much of industry. But the argument against a statutory minimum wage is now lost. The challenge for employers in higher paying industries such as engineering is to make sure that […]

The idea behind the Low Pay Commission, for which the bill to establish it was due in yesterday’s Queen’s Speech, has been vociferously opposed by much of industry. But the argument against a statutory minimum wage is now lost.

The challenge for employers in higher paying industries such as engineering is to make sure that the machinery created to set minimum wage levels suits their business needs.

The level of the minimum wage is likely to be below that paid by virtually all engineering employers. But it is still important that bodies such as the Engineering Employers’ Federation gain a voice on the commission.

While there is clear justice in setting a national minimum wage, it is important to manage its implications. As opponents of this kind of legislation are keen to point out, the devil is in the detail.

For the engineering industry, the devil could come in several guises. A minimum wage will hit the pay differentials enjoyed by skilled staff and if not handled carefully, will create real pressure on higher levels of pay. A secondary but potentially bigger worry is how and when the minimum wage would be uprated.

A simple annual uprating of the minimum rate could create a going rate for pay rises and remove bargaining power from employers.

There is still a lot to play for. Winning a deal which suits British industry means accepting the new rules and lobbying for a system which will maintain flexible and pragmatic industrial relations.