Minimum wage chaos ahead

27 February 1998

The TSA was invited to give evidence to government based on its members’ views. Around 67 companies in the textile rental industry responded to the TSA questionnaire.

Some 49% said that if the wage was higher, they would have no choice but to to cut staffing levels.

Although there will be no regional rates, but a national minimum wage, Murray Simpson, the TSA’s director pointed out that one had to establish what was meant by a standard hourly rate.

“What account is taken of premium or overtime attendance or time-keeping allowances? In many cases, if you take all those allowances together and divide them by the number of hours worked, you get a very healthy rate of pay,” he commented.

As things stand, the Low Pay Commission is due to issue its report by the end of May. Legislation to implement a national minimum wage will be going through at the same time and it is estimated that the earliest this legislation will come into effect will be September 1999.

“The laundry and cleaning industry is very labour-intensive,” said Mr Simpson. “The percentage of cost associated directly to labour in this industry is far higher than in many comparable industries, so if a minimum wage was set at too high a level, it would be particularly keenly felt.” If a wage was set at £4.15 or £4.40, then job cuts may be necessary, he stated. If a national minimum wage of £4.50/hour is implemented, it would have a knock-on effect on the pay of supervisors and junior managers who might be on a rate £4.30. “If a minimum wage is set at £4.50, then supervisors could demand £6 and things will get out of control”, Mr Simpson said.

In the hospitality sector, costs will also rise as a result of a national minimum wage. “The first thing the hospitality industry will do”, Mr Simpson predicts, “is to put pressure on their suppliers.

“I believe there will be major pressure exerted on the textile care industry to cut its costs and prices. The implications are very severe”.

Mr Simpson said the textile care industry had to be realistic.

“This government was elected on a platform of introducing a national minimum wage and received a huge majority, so it will be introduced.

“What we are saying is, make it reasonable, realistic and let’s give thought to how it will be implemented,” he said.

The bill already going through Parliament makes frightening reading, Mr Simpson said.

“The amount of records which employers will have to keep to prove that everyone has been paid above the minimum wage are vast.

“There is as yet no clear guidance on what exceptions there will be for young people or those in publicly funded training. Training represents a cost to companies and this must be taken into account.” The burden of proof has also changed, Mr Simpson warned. “It will be up to the employer to prove that staff have been paid above the national minimum wage, not for the employee to prove that they did not.

“It also looks as if this will be enforced and policed through the industrial tribunal system,” Mr Simpson said.

“There will also no longer be a two-year qualifying period to obtain a minimum wage, so the workloads of tribunal cases which employers might face could be fairly grave.

“We are not trying to paint an alarmist picture,” Mr Simpson said, “but we are saying that there are major implications to the introduction of a national minimum wage.

“I’m not surprised that the Low Pay Commission is keeping quiet at the moment. It has an almost unwinnable task.”

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