The British experience of minimum wages

Hong Kong's Provisional Minimum Wage Commission recently visited Britain for a study tour of the country's minimum wage system. The Commission has yet to publish its findings from the study, but for those concerned about possible adverse impacts of a minimum wage on the economy, the British experience may provide some alternative insights.

Research findings show that Britain's minimum wage experience has in fact been quite positive - the minimum wage has not only raised the real and relative pay of low-pay workers, narrowed gender wage gap and tempered wage inequality but most importantly, it has caused little or no significant adverse economic effects.

The UK's inaugural national minimum wage (NMW) in 1999 for workers aged 22 and above was ￡3.60 per hour and covered about 5-6% of the country's low-pay workers. Since then, the NMW has been uprated almost every year. In 2008, it increased to ￡5.73 per hour. This represents a 59.2% increase in nominal terms and an increase of over 20% in real terms since 1999. The increase is well above that in average earnings, which has only increased by about 30% in nominal terms during the same period. As a percentage of the median wage, the NMW has increased from 46% in 1999 to 51% in 2008.

As regards the gender pay gap, before the introduction of the NMW, the gap at the lowest decile in 1997 was 12.9% while the median gender pay gap was 16.1%. The corresponding figures in 2008 narrowed to 7.1% and 11.6% respectively.

Subsequent to the introduction of minimum wage legislation, wage inequality has also decreased. David Metcalf of the London School of Economics and a member of Britain's Low Pay Commission in 1999-2007 finds substantial NMW tempering of pay inequality: "Wage inequality rose relentlessly from 1978 to 1996. The diminution in this inequality from 1997 to 2005 caused the 50/10 wage ratio in 2005 to be the same as it was in 1989, reversing around half the growth of the inequality which occurred between 1978 and 1996. And this occurred in the face of a huge, rapid alteration in the labour market working in the opposite direction."

Contrary to folk economic wisdom, such improvements in pay have not destroyed jobs in Britain. Macro-level data on eight low-pay sectors supposedly most affected by the NMW shows that between 1999 and 2006, their share of total employment had remained virtually unchanged. The eight sectors are retail, hospitality, social care, cleaning, agriculture, security, textiles and clothing and footwear, and hairdressing. The only noticeable change in employment share occurred in the textiles, clothing and footwear sector; the change however was attributed more to the long-term decline of the sector going back decades than to the NMW. Research based on micro-level data similarly reveals no clear, statistically-significant evidence of employment losses either after the introduction of the NMW in 1999, or after its subsequent upratings in 2000, 2001 and 2003.

Admittedly, employers may cut the number of working hours rather than the number of employees in response to minimum wage legislation. There has been research that connects the NMW to cuts of between one and two hours per week in both basic and total working hours. But there has also been research that finds no significant changes in the number of hours worked after one, two and three years of the introduction of the NMW. So the verdict is still out on this front.

Another received economic wisdom expects a minimum wage to cause closure of some small businesses in low-pay sectors. The British experience however suggests that this may not necessarily be the case. Research shows that firm profit margins suffered after the introduction of minimum wages in low-wage firms. But there is no evidence that reduced profit margins resulted in a higher probability of closure of such firms. In the period between 1998 and 2004, the closure rate of workplaces with high percentages of low-pay workers was almost identical with the overall closure rate of firms in Britain. One possible reason is that "firms were making profits from paying low wages prior to the minimum wage introduction and that one consequence of the introduction of the minimum wage to the British labour market was to moderate these ‘excess' profits by channeling them back to the wages of low paid workers."

Our review of published research in the field is admittedly far from complete. It is also unclear how far the British experience can be readily transposed to Hong Kong. We nonetheless agree with the Provisional Minimum Wage Commission that minimum wage legislation should and would best be considered with the lessons of international experience in mind. We await the findings of the Commission, not least on the specific dimensions of the debate discussion above.

by George Cautherley

An abridged Chinese version of this article was published in Ming Pao on 4 November 2009 (below).

英國實施最低工資的經驗

臨時最低工資委員會最近前往英國考察當地實施最低工資的經驗。對擔憂最低工資可能帶來負面影響的人士來說，英國的經驗或許能提供一些新的見解。

研究顯示，英國在實施最低工資方面的經驗其實頗為正面。最低工資的實施不單提高了低薪僱員的實質和相對工資、收窄了兩性的工資差距（gender wage gap）、減低了整體工資的不平等，更重要的是最低工資沒有為經濟帶來顯著的負面影響。

英國在1999年實施全國性的最低工資。當時，年齡22歲或以上僱員的最低工資水平訂為時薪3.6英鎊。這工資水平令大約5%至6%的低薪僱員受惠。隨後，每年最低工資的水平大致上都有所調整。在2008年，最低工資上調至時薪5.73英鎊。由1999年起計，最低工資的名義（nominal）增幅為59.2%，而實質（real）增幅則高於20%。這增幅遠較同期的平均工資（average earnings）增幅為高，同期的平均工資名義增幅約為30%。相對於工資中位數（median wage），最低工資由1999年為工資中位數的46%增至2008年的51%。

至於兩性工資差距方面，在1997年，實施最低工資之前，收入最低的10%人口中的兩性工資差距為12.9%，而兩性工資中位數差距（median gender wage gap）則為16.1%。但在2008年，以上兩者的差距分別收窄至7.1%及11.6%。

最低工資未令英大量職位流失

除此之外，最低工資的實施也大大減低整體工資分佈的不平等。在1999至2007年間出任英國「低薪委員會」（Low Pay Commission）委員的倫敦政治經濟學院教授David Metcalf有這樣的研究發現：

「在1978至1996年間，工資分佈的不平等嚴重地惡化。但隨後的幾年，在1997至2005年間，這不平等得到大大的緩和。在2005年，人口工資分佈中，第5個十等份組別與第1個十等份組別的工資比例（50/10 wage ratio）已回復至1989年的水平。這意味最低工資的實施扭轉了大約一半1978至1996年間工資不平等的惡化幅度。」

以上提及最低工資的實施對工資及工資差距的改善，並未如傳統經濟智慧所預言般令英國大量職位流失。宏觀經濟數據顯示，在1999至2006年間，最可能受到最低工資影響的8個低薪行業的職位佔整體職位的比率，基本上沒有太大改變。這8個低薪行業分別為零售、款待服務（hospitality）、社康家居護理（social care）、清潔、農業、保安、紡織製衣和造鞋、理髮。就個別低薪行業而言，只有紡織製衣和造鞋業有較明顯的職位流失，而這職位的流失其實反映該行業的式微多於最低工資的影響。另外，引用微觀數據的研究同樣指出，並沒有確切及統計上顯著的證據，顯示最低工資實施的初期或其後多次工資水平上調引致職位流失。

誠然，企業未必以裁員節省開支，削減工時也可達至同樣目的。因此，即使最低工資未必令職位流失，它也有可能令僱員工作時數減少，從而減少僱員的實質收入。英國有研究發現，最低工資的實施令每周基本工時及總工時減少1至2小時。但另一方面，也有研究指出，最低工資實施後的1至3年間工時其實沒有統計上顯著的改變。因此，就英國經驗而言，最低工資會否影響工時現時仍未有明確定論。

傳統經濟智慧同時認為，最低工資的實施會令低薪行業內的一些小企業倒閉。英國的經驗顯示，事實不一定如此。研究顯示，最低工資的實施確實降低低薪企業的盈利率，但並沒有證據顯示盈利的降低令這些企業更易倒閉。在1998至2004年間，那些聘用較多低薪員工的企業的倒閉率，與英國企 業整體的倒閉率基本上完全相若。研究提出一個可能的解釋是：

「在未實施最低工資前，企業透過壓低工資以賺取更高的利潤。在勞工市場實施最低工資的功能，只是將部分的企業利潤轉移到低薪員工的薪金中，從而降低企業『過高』的利潤（excess profits）。」

上文對英國最低工資研究的簡介並不全面，英國的經驗是否適用於香港亦需進一步探討。但我們完全認同臨時最低工資委員會的看法，香港實施最低工資時必須充分地參考外國經驗。我們期待臨時最低工資委員會的考察報告，並希望報告的剖析會提及上文的各項議題。

高德禮（George Cautherley）

文章刋登於2009年11月4日明報

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