The coalition needs to go much further to uphold the minimum wage
Naming and shaming employers is a smart move but the maximum fine remains just £5,000 and enforcement is still lax.
Much to their later regret, both the Lib Dems and the Conservatives opposed the minimum wage when it was introduced by Labour in 1998. Now in government, they are increasingly keen to advertise their commitment to what is rightly considered one of the greatest policy successes of the last 15 years. Earlier today, Lib Dem business minister Jo Swinson announced tougher plans to name and shame employers who don't pay their workers the legal minimum. Under the previous scheme, the amount owed to workers had to be at least £2,000 and the average per worker at least £500 before an employer could be referred to the Business department from HMRC for naming (just one has been since 2011). The revised version will remove these restrictions so that any employer who breaks minimum wage law can be named. Swinson said:
Paying less than the minimum wage is illegal. If employers break this law they need to know that we will take tough action.
This is why I’m making changes so it is easier to name and shame employers who break the law. This gives a clear warning to rogue employers who ignore the rules, that they will face reputational consequences as well as a fine if they don’t pay the minimum wage.
All of which is commendable but falls short of what is required. The maximum fine for not paying the minimum wage is £5,000, a negligible amount for large companies (the Resolution Foundation's James Plunkett points out that it is ten times smaller than that for fly-tipping). Labour has rightly called for the level to be doubled, a pledge the government would be wise to match.
In addition, there are still far too few resources committed to enforcement. There was just one prosecution for failing to pay the minimum wage in the first nine years after its introduction and none at all in 2011 or 2012. For now, naming and shaming is a necessary but insufficient condition of protecting workers from exploitative bosses.
Tags: Liberal Democrats