The London borough where 1 in 5 aren't paid the legally required minimum wage
Published by Max Salsbury for 24dash.com in Local Government and also in Finance
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The Mayor of Newham has called on the government to give more powers to local authorities to enforce against employers who don't pay the minimum wage, after research found almost one in five residents in the borough take home less than £6.19 an hour.
Sir Robin Wales has asked for tougher action after Ipsos MORI's study revealed that many employers are currently breaking the law with their current wage structures.
The research also showed that nearly half of all residents in work do not receive the London living wage (£8.80 an hour).
HM Revenue and Customs is responsible for enforcing the minimum wage, but despite evidence presented by Newham Council that the law is widely flouted, only nine prosecutions have been made nationally since 2001.
Newham says that local authorities work closely with businesses on a "range of issues but currently have no investigative or enforcement powers to secure compliance with the minimum wage legislation".
Mayor Wales is calling for these powers to be devolved to councils, alongside tougher penalties, to enable them to take direct action and prevent workers from being exploited.
Sir Robin Wales said: “Many people do not realise that there is a hidden economy operating in the UK where workers are still not receiving the national minimum wage. It is a disgrace that laws introduced to prevent poverty pay are so poorly monitored and enforced.
“We’re on the side of businesses that play by the rules and we will continue to work closely with them to bring new investment to the borough. However, we will come down hard on those that flout the law. Local enforcement powers would enable us to build a thriving local economy full of opportunities for our residents to get into good quality employment. However, without the national recognition that pay abuse still happens, that’s just not possible.”
Cllr Andy Hull, author of the Centre for London report 'Settle for nothing less: enhancing national minimum wage compliance and enforcement', and executive member for finance at Islington Council, said: “This research is an important reminder that non-compliance with the national minimum wage is rife.
"HMRC are too remote to stop it. Local authorities, much closer to the ground, are better placed to enforce the minimum wage in their patch. Fifteen years after the minimum wage was introduced, it’s time now to devolve the power and responsibility for tackling such exploitation from Whitehall to the town hall.
"That would take us a step closer to a modern Britain in which no-one has to work for less than the legal minimum.”
One of the borough's biggest employers, West Ham United, said they are fully compliant with national minimum wage legislation.
Previous research conducted for Newham Council by Ipsos MORI and local charity Community Links found that workers not earning a fair wage struggle to make ends meet and are vulnerable to unexpected changes in their working patterns.
They face the stress of living on very low incomes and the social stigma and vulnerability of working in the informal economy. Many did not believe they were worth the minimum wage.