The British national minimum wage

Great Britain has had statutory regulation of minimum pay for much of this century but never previously had a national minimum wage (NMW). This paper outlines the history of minimum wage regulation culminating in 1997 with the establishment of the Low Pay Commission (LPC) and the introduction of the NMW this year. The main issues considered by the LPC were the definition of the NMW, the rate itself and what to do about younger workers. As well as its own deliberations, the LPC took written and oral evidence and held over 200 meetings around the United Kingdom. This process was vital in achieving unanimity around a NMW (ú3.60 from April 1999 for those aged 22+) acceptable to the government. Comparative international evidence on coverage and cost was also important in coming to our conclusions and the British NMW is towards the middle of the range of coverage among OECD countries. Although there is general agreement that minimum wage systems reduce wage inequality, their impact on the distribution of household income is more controversial. Evidence presented suggests the NMW may have a more egalitarian impact on household incomes than is sometimes asserted. The Report of the LPC is only the beginning of the story. Responses to it were generally favourable: parliamentary regulations are needed to translate the recommendations into law; the NMW has to be enforced and evaluated. This necessary follow-up to the Report is discussed in the concluding sections

British Unions: Dissolution or Resurgence Revisited

Union membership rose by 100,000 in 1999 ending two decades of sustained membership losses û the longest, deepest decline in British labour history yielding a cumulative fall of over 5 million members. This paper analyses that haemorrhage in membership and asks whether or not the recent increase augurs a resurgence in unions' fortunes. Membership data and voice arrangements are described first. Then the decline in membership in the 1980s and 1990s is analysed, emphasising both the failure of unions to achieve recognition in newly established workplaces and plummeting density where unions remain recognised. The health of unions turns, in part, on their appeal to potential members, so their ''sword of justice'' impact is set out next showing how unions have an egalitarian effect on the distribution of pay, cut accidents and promote both family friendly and equal opportunity policies in the workplace. It is unlikely that employment will grow disproportionately in unionised sectors of the economy. So any revival of unions depends on organising activity among both individuals and firms. The pivotal importance of new recognitions is discussed by analysing three forms of marriage between capital and labour û true love, convenience and shotgun. The paper concludes that a twin track organising strategy would help unions partially reverse their membership losses û signing up new employers but also focusing on the 3 million plus free riders who are covered by collective agreements but not members.

Tax Policies for Low-Carbon Technologies

The U.S. tax code provides a number of subsidies for low-carbon technologies. I discuss the difficulties of achieving key policy goals with subsidies as opposed to using taxes to raise the price of pollution-related activities. In particular, subsidies lower the cost of energy (on average) rather than raising it. Thus consumer demand responses work at cross purposed to the goal of reducing emissions (especially as average cost pricing is used for electricity). Second, it is difficult to achieve technology neutrality with subsidies-here defined as an equal subsidy cost per ton of CO2 avoided. Third, many subsidies are inframarginal. Finally, subsidies often suffer from unintended interactions with other policies. I conclude with some observations on the use of price-based instruments. In particular I discuss how a carbon tax could be designed to achieve environmental goals of emission caps over a control period.

Unions and Productivity, Financial Performance and Investment: International Evidence

If the presence of a union in a workplace or firm raises the pay level, unless productivity rises correspondingly, financial performance is likely to be worse. If the product market is uncompetitive this might imply a simple transfer from capital to labour with no efficiency effects, but is probably more likely to lead to lower investment rates and economic senescence. Therefore the impact of unions on productivity, financial performance and investment is extremely important. This paper distils evidence on such effects from six countries: USA, Canada, UK, Germany, Japan and Australia. It is not possible to use theory to predict unambiguously any union effect on productivity because unions can both enhance and detract from the productivity performance of the workplace or firm. The evidence indicates that, in the USA, workplaces with both high performance work systems and union recognition have higher labour productivity than other workplaces. In the UK previous negative links between unions and labour productivity have been eroded by greater competition and more emphasis on 'partnership' in industrial relations but there is a lingering negative effect of multi-unionism, just as there is in Australia. In Germany the weight of the evidence suggests that the information, consultation and voice role of works councils enhances labour productivity particularly in larger firms. In Japan unions also tend to raise labour productivity via the longer job tenures in union workplaces which makes it more attractive to invest in human capital and through the unpaid personnel manager role played by full-time enterprise union officials in the workplace. Unions will reduce profits if they raise pay and/or lower productivity. The evidence is pretty clear cut: the bulk of studies show that profits or financial performance is inferior in unionised workplaces, firms and sectors than in their non-union counterparts. But the world may be changing. A recent study of small USA entrepreneurial firms found a positive association between unions and profits and in the UK the outlawing of the closed shop, coupled with a lower incidence of multi-unionism has contributed to greater union-management cooperation such that recent studies find no association between unions and profits. North American and German evidence suggests that unionisation reduces investment by around one fifth compared with the investment rate in a non-union workplace. In both Canada and the USA this effect is even felt at low levels of unionisation. The UK evidence is mixed: the most thorough study also finds that union recognition depresses investment, but this adverse effect is offset as density rises. The exception is Japan where union recognition goes hand-in-hand with greater capital intensity.unions, productivity, profits, investment

The British National Minimum Wage

Great Britain has had statutory regulation of minimum pay for much of this century but never previously had a national minimum wage (NMW). This paper outlines the history of minimum wage regulation culminating in 1997 with the establishment of the Low Pay Commission (LPC) and the introduction of the NMW this year. The main issues considered by the LPC were the definition of the NMW, the rate itself and what to do about younger workers. As well as its own deliberations, the LPC took written and oral evidence and held over 200 meetings around the United Kingdom. This process was vital in achieving unanimity around a NMW (ú3.60 from April 1999 for those aged 22+) acceptable to the government. Comparative international evidence on coverage and cost was also important in coming to our conclusions and the British NMW is towards the middle of the range of coverage among OECD countries. Although there is general agreement that minimum wage systems reduce wage inequality, their impact on the distribution of household income is more controversial. Evidence presented suggests the NMW may have a more egalitarian impact on household incomes than is sometimes asserted. The Report of the LPC is only the beginning of the story. Responses to it were generally favourable: parliamentary regulations are needed to translate the recommendations into law; the NMW has to be enforced and evaluated. This necessary follow-up to the Report is discussed in the concluding sections.