London Rising

When the national minimum wage was first introduced, in 1997, many people worried that it would cause unemployment. Yet there is now widespread consensus that there has been little effect on employment levels, whilst the policy has ensured that people who work are fairly rewarded, with correspondingly reduced reliance on benefits. All the main political parties now support the minimum wage – indeed they are examining ways of strengthening it.

Yet, as this ground-breaking report sets out, there is good reason to think that a minimum wage that works for the rest of the country doesn’t work for the capital.

London Rising applies the methodology used to determine the national minimum wage to the London economy. It finds that the distinctive structure of the London economy means that the capital could bear a higher statutory minimum wage than the rest of the country. The report argues that the Low Pay Commission should be required to recommend a London minimum wage in addition to a national one, with the power to set a London rate given to the Mayor.

This report has been generously supported by Trust for London.

 

We launched London Rising and its sister publication Settle For Nothing Less with a public discussion with a panel of policymakers and independent experts on 3rd December 2013. Further information can be found here.

Independent responses to London Rising

This report presents a compelling case that a minimum wage in London would have more winners than losers, while the current national minimum has essentially no impact. The labour market is not like that for baked beans and signalling the right wage, as the Living Wage campaign has done, is equally important.

 Bridget Rosewell, Former Chief Economic Advisor, GLA

 

London Rising offers a comprehensive analysis of why the capital’s working poor benefit less from the current national minimum wage than their counterparts in other parts of the country. London’s working poor deserve a higher minimum pay rate and the increase suggested in the report is both sensible and affordable. Businesses of all types and size could meet the proposed statutory pay rise for London’s working poor without harming jobs or putting businesses at a competitive disadvantage. Both the Government and the Mayor of London should sanction it and help alleviate in-work poverty in one of the world’s most prosperous cities.

 John Philpott, former director of Employment Policy Institute and former Chief Economic Adviser at the CIPD

 

This report shows that London has more wage inequality than the rest of the UK, and that low-wage Londoners have not benefitted as much from the national Minimum wage as workers in the rest of the UK.  Using a thorough and evidence-based approach it shows how the London labour market can support a minimum wage considerably higher than the current NMW and makes a strong case that action is needed to protect the living standards of low-earning Londoners who are the wrost off in the UK because the cost of living is so much higher.

Alan Manning, Professor of Economics, LSE

 

The growth of poverty pay is a scar on the capital’s welcome economic revival. A minimum wage supplement for London – alongside more living wage employers – would help alleviate working poverty and this report show that businesses in the capital can afford it. An additional  44p an hour would mean an extra £800 a year for many low-paid Londoners, with taxpayers saving up to £61 million too through greater tax revenues and fewer benefits. London needs fairer pay rises so that the benefits of growth aren’t confined to City bankers but reach workers across the capital.

 Frances O’Grady, TUC General Secretary

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