“The introduction of the national minimum wage benefited more than one and a half million low paid workers – one million of them women – and for that I am proud”
In 1998 the first report of the Low Pay Commission paved the way for the introduction of the national minimum wage. The commission was made up of business leaders, economists and union representatives. The idea was that, by conducting a detailed analysis of low pay in different sectors and different parts of the country and coming to an agreed conclusion, the Commission could recommend a minimum rate that was fair for workers and that employers could meet without having to cut jobs.
Representing the union movement were The TUC’s chief economist at the time, Bill Callaghan, Paul Gates from the National Union of Knitwear, Footwear and Apparel Trades, and Rita Donaghy from UNISON. We spoke to Rita Donaghy about the work of the commission.
What was the background to the unions being involved in the Low Pay Commission?
We were really just standing on the shoulders of those who had been championing a national minimum wage for decades. In particular, Rodney Bickerstaffe was a passionate and committed advocate for the national minimum wage within the TUC. He faced much opposition but eventually in the mid 1980s, congress agreed to commit to it and so when the incoming Labour Government made it a priority in 1997 we were ready to participate.
Why was a national minimum wage a contentious issue for unions?
Unions had done much to boost workers’ wages over many years through agreements with employers. At a time of rising union membership this was seen as the best way to tackle poverty pay. Many trade unionists feared that if wage levels were set by the state this would lower rather than raise them.
How did the commission work?
The commission first met soon after the 1997 election and was established as an independent statutory body a few months later. Then, for a year, we lived it – it took over our lives. But we knew we were involved in something historic and we were committed to reaching unanimous agreement on our recommendations to the Government. At the time, the figure we secured was as important to us as creating a robust framework that would guide decisions. To this day I am very proud of the framework and it still guides the annual report that the Low Pay Commission makes to the Government each year on minimum wage rates.
How did you agree the framework?
We travelled the country meeting employers, employees, charities and trade federations. We also had economists, data analysts and employment specialists to advise us. The framework and our recommendations needed to be evidence-based and to take into consideration everything from London weighting – to take account of the higher cost of living in the capital – to apprentices, overtime to piece rates, which is where people are paid according to the number of goods they produce, and many other factors.
Did you face any difficulties as a group?
Despite representing very different stakeholders, we worked very well together. The Conservative press, and some economists were against the idea of a national minimum wage, saying it would cost the UK a million jobs. And there were concerns in some sectors – catering, hairdressing, retail, for example – about how the wage would affect business. And we had to be sensitive to those homeworkers and women in textile and other trades who could have got into trouble with their bosses if it was known that they had spoken to us.
Were you pleased with the result?
We had to make some concessions. I would have liked young people to get the same rates and the unions would have liked a higher figure than £3.60 as the initial minimum wage, but I am proud that it set in place a policy that paying less than the minimum wage was illegal. The irony for the union movement was that the majority of people who benefitted from the national minimum wage were not union members but it was a moral issue and showed that unions were capable of thinking of all workers not just trade union members and that was very important. And as The TUC said at the time, the introduction of the national minimum wage benefited one million women and for that I am very proud.”
Taking the story forward
The minimum wage did not cost jobs as the critics had forecast but throughout the early 2000s employment levels grew. And now workers in the ‘gig’ economy and other forms of precarious employment rely more and more on the minimum wage to offer some form of protection from the worst sorts of exploitation. The Conservatives eventually came round to realise the value of the minimum wage and now even champion it controversially re-branding it the ‘national living wage’.
Meanwhile the Low Pay Commission, with the same balance of membership including employers, unions and independent academics, continues its work each year looking at impact of wage levels in different sectors and making agreed recommendations.