This critical literature review will focus on the impact of the National Minimum Wage on employment. This is an area we have had to familiarise ourselves with more and more throughout the last ten years because of the controversial effect of its instalment in April 1999 and its ever increasing minimum wage amount which causes most concern.
The application of a few statistics should help summarise the ever increasing minimum wage and the sheer scale of people affected by its introduction. The national minimum wage has increased by a staggering 59% in the last ten years; from £3.60 in April 1999 to £5.73 in October 2008. (HRM, 2008) According to George Sayers Bain (1999) as from April 1999, the year of its instalment , “some …show more content…
He argues that the analysis should have focused on the number of hours worked instead of the number of employees (Berman 1998). Brown (1999) also holds to support along the same lines as Berman, “hours per week fall when minimum wages increase, so the effect on hours worked is more pronounced than the effect on bodies employed”.
Berman and Brown have a concise and valid point as research of the ‘Low Pay Commission’ itself does indicate that a commonly implemented tactic amongst firms is to reduce employees weekly working hours. Additionally Stewart and Swaffield (2006, cited by Neumark and William, 2007) reinforce this theory by supplying evidence that concludes that the minimum wage led to reductions of one or two hours per week for the affected workers. Despite the claims of these critics, based upon the literature used, there has been no peer-reviewed research to date that contradicts or opposes the findings of Card and Kreuger. Rather-more research that suggests a need for alterations exists.
All the different low paying sectors in employment are affected in their own ways. Retail and Hospitality are massive sectors so the increased minimum wage is obviously going to affect them more than say the security sector. The difference is illustrated on the next page in the diagram.
After establishing that all sectors of employment are affected in their own ways