The Tories need a rethink on the minimum wage

Article by Mark Littlewood for the Daily Telegraph (online)

With rising unemployment and falling productivity, maintaining the present minimum wage structure is a triumph of woolly-headed aspiration over economic reality, says Mark Littlewood.

With youth unemployment rising to 1 million, the Government – or more realistically the Tories – need a radical rethink of the how the British labour market works. Or more to the point, how it doesn’t.

David Cameron has been right in highlighting the absurdity and outrage of Britain’s poverty trap – whereby those on relatively low wages have little or no incentive to work as opposed to claiming welfare. And, no doubt, applying pressure to those who are essentially fit to work but on the swelling lists of incapacity claimants is a long overdue move. But, at the moment, the Conservatives are only telling half the story.

The full, and substantial, cost of Britain’s minimum wage legislation is becoming increasing plain to see. In times of plenty, the impact it had on pricing employees out of the labour market was less dramatic. But in the depths of a recession, it acts as a real barrier in getting people back to work. This is