Minimum wage enforcement must adapt to post-Covid labour market

25 May 2021

The Covid-19 pandemic has left low-paid workers more vulnerable and businesses under greater pressure than ever before which increases the risk of minimum wage underpayment and demands a proactive and strategic response from the Government.

Published by the Low Pay Commission (LPC), these are the conclusions of a report into compliance and enforcement of the National Minimum Wage (NMW).

While the Government has accepted over 20 separate recommendations from the LPC since 2017, the Commission believes that more needs to be done to build workers’ confidence in the enforcement system and to support employers to comply with the rules.

This report therefore reviews progress in several key areas where the LPC has previously made recommendations.

LPC Chairman Bryan Sanderson said: “Underpayment is a serious threat to the success of the minimum wage. The evidence we have heard, from workers and employers alike over the past year, leaves little doubt about the strains placed on low-paying sectors by the pandemic and the increasing risk of non-compliance.”

“Non-compliance and enforcement of the National Minimum Wage” can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/978383/2021_LPC_non-compliance_report.pdf.

It also reflects on the widely-reported problems of labour market abuses in the textiles industry in Leicester and recognises that there are no simple solutions to the difficulties faced by enforcement bodies.

“It is clear that the effects of the pandemic will outlast the lockdown period and will require a disciplined but innovative management response,” Mr Sanderson concluded. “We hope that today’s report makes a helpful contribution to that process.”