Low-paid worse off after end of council protection

THE GOVERNMENT'S decision last year to abolish the Wages Councils, which enforced minimum rates of pay for 2.5 million workers, has depressed wages in hundreds of thousands of already low-paid jobs, according to a national survey.

The Low Pay Network found that one-third of jobs formerly covered by Wages Councils were paying less than the rate the councils would have set. But there is little evidence that this has made employers more willing to take people on in these sectors, as ministers had predicted. Employment in hotels and catering - a key former Wages Council sector - has fallen by 27,000 since abolition.

The survey covered 5,918 jobs advertised in 128 JobCentres around the country. It found that the number of former Wages Council jobs now 'underpaying' had risen from a fifth in November to more than one-third in April and May, nine months after abolition. More than half of the jobs surveyed for shopworkers paid less than former Wages Council rates, compared with 34 per cent for hairdressing and 28 per cent in hotels, catering and clothes manufacture.

The degree of underpayment varies, with jobs in cafes and hairdressing paying, on average, more than 10 per cent below the old minimum. Underpayment averages 6 to 7 per cent for shopworkers and clothing machinists. It is most common in the North, the North- west and Yorkshire and Humberside, and lowest in East Anglia and the South- east.

In many cases, wage levels have been frozen at the levels set in 1992, without workers receiving the inflation- linked increase which the councils were likely to have recommended this year. Young people reaching the age at which they would have become entitled to Wages Council protection have not had their pay increased as it would have been under the old system.

The Low Pay Network argues the fall in pay rates may be pushing more people into means-tested social security benefits and increasing the amounts to which those already reliant are entitled. It estimates that a quarter of Family Credit recipients could be former Wages Council workers.

'This dependence on means-tested benefits is not only unhelpful to families (who can face a marginal tax rate of 97 per cent and thus find it difficult to work their way out of poverty), it also increases the fiscal problems associated with rising benefit requirements and lower yield from employment,' the report said.

Wages Councils, which arose out of the Trade Boards established in 1909, enforced pay rates well below the national average. A shopworker on the highest Wages Council rate would have earned less than pounds 124 for a 39-hour week, compared with the average weekly wage in April last year of pounds 283.40.