§ Mr. Alan CampbellTo ask the Chancellor of the Exchequer what estimate he has made of the number of people in the Tynemouth constituency who will benefit from the introduction of the minimum wage. [59007]
§ Ms HewittThe information requested falls within the responsibility of the Director of the Office for National Statistics. I have asked him to reply.
Letter from Tim Holt to Mr. Alan Campbell, dated 10 November 1998:
As the Director of the Office for National Statistics (ONS), I have been asked to reply to your recent parliamentary question on the introduction of the minimum wage.The national minimum wage (NMW) will become effective in April 1999 and has been set at £3.60 for workers aged over 21. A development rate of £3.00 per hour will apply for those aged 18 to 21. Workers aged 16 and 17 and all those on apprenticeships will be exempt.The Low Pay Commission, in arriving at their recommendations, had to adjust 1999 pay rates to 1998 values. Their methodology produces £3.50 and £2.90 as the 1998 values of the government's preferred rates.The preferred method for assessing the coverage of the proposed NMW is to present adjusted NES and Labour Force Survey (LFS) data for the number of employees earning less than the proposed NMW rates. This method adjusts for the fact that the NES is based on a one per cent. sample of employees in the PAYE system and is therefore likely to under-represent relatively low paid staff, earning below the tax-threshold, and in particular those who work part-time. It is not possible to use this method for small areas, and information solely from the NES, has therefore been provided. Regrettably, NES cannot provide statistically reliable estimates for Tynemouth constituency, therefore information for Tyne and Wear Metropolitan County has been provided.The latest available information from the 1998 New Earnings Survey shows that 4.5 per cent. of workers over 21 years of age in Tyne and Wear Metropolitan County earn less than £3.50 per hour and 4.7 per cent. of workers aged 18 to 21 years earn less than £2.90 per hour. The information is given as a proportion of workers because appropriate grossing factors for the NES sample are not available at very detailed levels of disaggregation.The extent of the bias in the NES data may be estimated for the North East by using the adjusted NES and LFS data for all employees. This suggests that the estimate of the overall proportion of full-time employees aged over 21 years earning below £3.50 could understate the true position by as much as 5 percentage points. However, it is unlikely that the occurrence of lower paid jobs is uniform across the region, and so it would be wise to treat this figure as broadly indicative rather than as a precise estimate. I am unable to provide the bias for employees aged 18 to 21 years because the sample size is too small for a reliable estimate to be produced.