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Wage refers to the monetary compensation given to employed individuals, in return for their labour. Minimum wage is the minimum amount of compensation that must be paid to the employees for performing a particular job. Wage or particularly minimum wage may be paid on an hourly, daily or monthly basis.
The amounts of the minimum wage are usually established by government authorities, and the payment of minimum wage is one of the most important aspects of employees’ and labour rights. The rate of minimum wages is different in different countries, and various relevant factors are taken into consideration before a government body proposes a suitable amount for minimum wage in the country.
Amounts for minimum wages are mainly decided on the basis of prices and costs of basic necessities of life, within a particular country. Minimum wages are extended to ensure that each working individual should at least have access to the essentials of life.
History of Minimum Wage in the UK
After the establishment of minimum wage law in New Zealand and Australia, British too considered the implementation of laws concerned with the payment of minimal wage amounts. In 1907 Ernest Aves was sent as a representative of the British Secretary of State for the Home Department to inspect the effects of minimum wage law in countries in which it was already being practised.
After his appraisal, Ernest formulated an analysis and prepared a report based on the evidence and effects of the minimum wage law in New Zealand and Australia. Winston Churchill, the president of the Board, acknowledged his findings and introduced a Trade Board Act on March 4, 1909. This was the first national system of wage regulation established in the U.K. The law was instituted for action in 1910. Four Trade Boards were formed as result of the Trade Act.
Formation of the Wage Councils
The scope of this first law was very limited. The minimum wages set by Trade Boards varied from industry to industry. It only focused on the industries that were weak in the area of collective bargaining.
After the world war in 1945, the Trade Boards were modified and were now referred to as Wage Councils. The working level was enhanced, and the scale for law imposition was extended. The aptitude of the Wage Councils rose gradually with considerable development by the mid of the 20th century. Wage Councils now consisted of 26 councils, broadly catering two million employees around the U.K.
Abolishment of the Wage Councils
The supporters of collective bargaining turned against Wage Councils. They considered councils as an opposition unit to trade unions and took measures to eliminate them. By 1986, conservative government took measures to eliminate the Wage Councils.
They restricted the Wages Act for the new employees and intended to reduce their reliance on the councils. By 1993, the wage councils were completely abolished.
Introduction of the National Minimum Wage Act
Minimum wage act was introduced in 1998. This act was developed in support of collective bargaining. Trade unions were now capable of negotiating on wages for employees through collective bargaining.
During 1999, national wages were superimposed by the Low Pay Commission created in favour of collective bargaining. Minimum wages rate was set to £3.60 per hour for individuals aged 22 or over.
In 2009, a member of the conservative government named as Christopher Chope formulated a bill to relax the restrictions on employees, applied as a consequence of minimum wage laws. The bill was forwarded to the other private members, but it only got signed by 10 MPs in the conservative government and did not succeed to gain the approval of other members.
Modern perception of minimum wage
Conventionally, the minimum wage was perceived as an active participant contributing towards the creation of unemployment. The orthodox approach adopted for the explanation of minimum wages elaborated on the concept, rendering it as a factor that supported undue interference in the markets, which may lead to inflation and unemployment. Various economists and market participants found it hard to accept third-party intervention concerning the significant subject of employee wages.
However, according to conclusion derived on the basis of latest studies and practices, minimum wages may play a part in the creation of unemployment, but the impact is only very marginal. Hence, the modern explanation of minimum wages has been shaped to exclude any such apprehensions, which cannot be completely attributed to the introduction and applications of minimum wage laws.
