It was introduced after careful study and consultation following the creation of the independent low pay commission . In February, the government raised the minimum wage by 10p, to take effect in October. The commission concluded that a national minimum wage would increase the country's wage bill by little over 0.5 per cent. For the vast majority of businesses, the increase would be manageable. The most substantial increases would fall in the retail and hospitality sectors.
Smaller firms are more likely to be affected.
The commission had to find a balance between a high minimum wage that would make a more substantial difference to the low paid, and the risk that jobs might be lost or that goods and services might become more expensive. The unit took into account pay differentials, business costs, competitiveness, inflation, employment and public sector finances and came up with the figure of 3.60. It also considered the implications of other statutory minimum wage regimes, notably the former wages councils in the UK, and international systems. Setting a national minimum wage is just part of the government's arsenal to fight poverty. The minimum wage delivers considerably less new money to the poor than Labour's other measures, such as new state benefits and tax breaks for the lowest earners, similar to those introduced by American president Bill Clinton .