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Maria elfani

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  • 1. How UK National Minimum Wages affect the Non-Wage Benefits of Labour Migrants? Maria Elfani Postgraduate Research Student Society 12 November 2010
  • 2. Agenda: 1. Impact of Minimum Wage to Employement 2. Impact of Minimum Wage to Non-Wage Benefits 3. Methodology
  • 3. Historical UK National Minimum Wage Adult Rate 22+ Development Rate (18-21) 16-17 Yrs Rate 1-Apr-99 £3.60 £3.00 - 1-Oct-00 £3.70 £3.20 - 1-Oct-01 £4.10 £3.50 - 1-Oct-02 £4.20 £3.60 - 1-Oct-03 £4.50 £3.80 - 1-Oct-04 £4.85 £4.10 £3 1-Oct-05 £5.05 £4.25 £3 1-Oct-06 £5.35 £4.45 £3.30 1-Oct-07 £5.52 £4.60 £3.40 1-Oct-08 £5.73 £4.77 £3.53 1-Oct-09 £5.80 £4.83 £3.57 1-Oct-10 £5.93 £4.92 £3.64
  • 4. Impact of Minimum Wage to Employement Research Question: Will the increasing Minimum Wage reduce employment?
  • 5. Literature Review: Minimum Wages  Employment ↓ Employment S D W1 E1E2 W2 Wages (Gwartney and Stroup,1987) E3 A B C
  • 6. Impact of Minimum Wage to Non-Wage Benefits Research Question: Will the increasing Minimum Wage reduce non-wage benefits?
  • 7. Literature Review: • Non-wage benefits is the compensation other than wages • Non-wage benefits count for 26.9% of total compensation (Ehrenberg and Smith, 2003) • Because of their large proportion to total compensation, organization sometimes implements changes to their benefit program to control the cost (Williams, M.L., 1995) • To the extent that 15% of these benefits are voluntary and flexible, it may lead to changes in compensation regulation (Pierce, 2001).
  • 8. (Survey by employeebenefits.co.uk in 2009)
  • 9. Literature Review: Empirical Evidence in the US 1. Training • Leighton and Mincer (1981); Hashimoto (1982); Neumark and Wascher (2001) found that an increase in minimum wages may lead to a reduction in on-the-job training • Lazear and Miller (1981), Acemoglu and Pischke (1999) found that minimum wages have no effect to training
  • 10. Literature Review: Empirical Evidence in the US 2. Fringe Benefits • Wessels (1980) and Alpert (1986) found that an increase in minimum wages will make small reductions in fringe benefit in the retail and restaurant industries • Royalty (2000) however found a surprising result that a small increase in minimum wages will increase health insurance and pension benefits, but larger increase in minimum wages will reduce the health insurance and pension benefit. • Simon and Kaestner (2004) however found that there is no effect of minimum wages to fringe benefits
  • 11. Literature Review: Empirical Evidence in the UK • Dickerson (2007) reported that there is no significant evidence to say that changing in Minimum Wage will change the training provision • Allison, et al (2009) in their survey to 202 companies/organizations operating in low pay sector reported that only two fast food companies and two social care organizations reduce their training budget but this is not fully due to an increase in NMW, but due to an increasing in the cost elsewhere
  • 12. Methodology Secondary data:  Labour Force Survey  Workplace Employee Relations Survey  Annual Survey of Hours and Earnings