Is the Government failing to enforce the minimum wage?

"In the last two years, there has not been a single prosecution for breach of the national minimum wage, even though 13% of those working in care homes in this country are on less than the national minimum wage. Is it not time the Government sorted that out, so that fewer people choose to come here?"

Chris Bryant MP (5 March 2013)

Benefits for migrants was the subject of the day yesterday in Parliament after Frank Field tabled an urgent question asking how the Government is planning to deal with the anticipated influx of newcomers from Romania and Bulgaria once restrictions are lifted next year. 

It echoes concerns voiced by Migration Watch UK last week that prospective migrants from the Eastern European states have several economic incentives to move to the UK, including a better relative minimum wage. Another worry - voiced by Labour Leader Ed Miliband among others - is that some economic migrants settle here because they can undercut the minimum wage illegally, forcing local workers out of jobs.

Several Labour MPs stood up to question the Government's readiness - not least pointing out that our own laws enforcing the national minimum wage were lax - having prosecuted no one under the law for the last two years.

The basics

The current national minimum wage is £6.19 an hour for adults aged 21 and over, £4.98 for 18-20 year-olds, £3.68 for workers aged 16-17 and £2.65 for apprentices. People on the minimum wage have had a relatively good break since it was introduced, enjoying growth beyond inflation and average earnings (and recently, even beyond GDP):

It's thanks to the National Minimum Wage Act 1998 that we have a legal basis for securing a basic level of pay, and section 31 of the Act for laying down the rules of compliance by which prosecutions can take place. Speaking of which...

Bang 'em up, or not...

The figures being used repeatedly by Labour on the lack of recent prosecutions come from a Parliamentary Question submitted by Chris Bryant at the start of last month. Asking the Attorney-General how many successful prosecutions were made in the last few years under minimum wage legislation, came the reply:

"...no prosecutions for relevant offences were completed in either 2011 or 2012 and thus no convictions are recorded for these years. There is currently one live prosecution which awaits trial and is sub judice."

So Mr Bryant's claim is correct - there have been no recent prosecutions. But this isn't the whole story - a more recent question from Chris Ruane MP shows that prosecutions were almost as uncommon under the previous Government. The first prosecution for minimum wage non-compliance took place in 2007 - nine years after the law was passed. To date, only nine prosecutions have ever taken place. 

We also need to acknowledge that prosecution isn't the only answer. The Low Pay Commission itself notes in its most recent report:

"Prosecuting any employer is resource intensive. It involves gathering evidence, preparing a case, and seeing it through to final prosecution. It is right that prosecutions will not be appropriate in the majority of cases of non-compliance."

Instead, the previous Government brought in a system of penalties in 2008 so that exploited workers could claim arrears and employers would face penalties. In the 2010/11 financial year, 937 cases saw a penalty imposed, totalling over £560,000.

Poor care for carers?

Not every job in the UK pays at least the national minimum wage, but this doesn't necessarily mean people are breaking the law. Some employers have legitimate means to pay below the wage, including those which provide accommodation or employ apprentices.

The latest figues from the Annual Survey of Hours and Earnings (ASHE) confirm that in spring 2012 around 287,000 jobs held by people aged 16 or over payed less than the then national minimum wage for adults and younger workers - equivalent to 1% of jobs in the UK.

When it comes to estimating care workers specifically, it's a little more difficult to come by reliable estimates. The Low Pay Commission confirm that in 2011 8% of social care jobs were paid at or below the wage at the time, however this conflates being payed at the minimum level with being payed below it, and it's a measure of jobs, not workers.

Labour's figures appeal to research carried out by King's College London which combines existing data from sources such as the ASHE with surveys in order to model for unpaid working time. In a care worker context, this means that detecting unpaid travelling time between clients and hours on call, which is identified by the Low Pay Commission as a key concern in the sector.

The result: between 9% and 13% of direct care workers are paid below the minimum wage, according to the research. This equates to between 157,000 and 219,000 workers, based on estimates of the total social care workforce from Skills for Care.

Conclusion

The real concern in the context of yesterday's debate is whether the Government can effectively enforce the minimum wage so that - in the words of Chris Bryant - fewer people choose to come here.

Of course where there are potential 'gaps' in prosecuting non-compliant enmployers, there are also gaps in knowing how numerous they are in the first place. This is where the care sector fits in - as the Low Pay Commission has highlighted evidence that some employers are paying out wages restrictively for direct visit time only and not for workers' travel or time on-call.

For migrants, the Commission adds another concern - that some existing workers from abroad already suffer from abuse and exploitation (such as using un-clear pay slips) that mean even the workers themselves aren't necessarily aware they're at the wrong end of the law.

As far as the evidence indicates, the Government will have their work cut out for them in the coming months to bring minimum wage compliance up to standard.

Update (17 January 2014)

Since this article was first written there has been one additional prosecution for not enforcing the minimum wage in 2012-13, bringing the total since 2006 to nine. The article has been updated accordingly.