Measurement of low lay for the Low Pay Commission - Future of Work research centre - University of Bath - School of Management

Future of Work research centre

University of Bath School of Management

Measurement of low pay for the Low Pay Commission

Chris Dawson has been investigating, with colleagues, the measurement of low pay in large scale official data sources for the Low Pay Commission in the UK. This report contributed to the October 2014 setting of the National Minimum Wage. In this report, using contemporary behavioural economic theory, various proposals were made to the Low Pay Commission including that the National Minimum Wage (NMW) should be set at a rounded value. These were accepted by the Low Pay Commission with its recommendations for NMW rates to be set at £6.50 from October 2014.

The Low Pay Commissions annual report 2014 external website makes countless direct references to the report linking it to their 2014 NMW decision. For example:

"Fry and Ritchie (2012a and 2012b) and Dawson, Ritchie and Whittard (2014) suggested that employers, particularly those in small firms, use focal points to set wages. The new recommended rate is a focal point and currently just under 200,000 workers are paid at this wage"

The Low Pay Commission's annual report 2015 external website again made reference to the report linking it directly to the new rate. For example:

"Coverage might also be affected by the NMW for adults being again set at a round number this year. Fry and Ritchie (2012a and 2012b) and Dawson, Ritchie and Whittard (2014) suggested that employers, particularly those in small firms, use focal points or round numbers to set wages."