The introduction of the National Minimum Wage led to employers cutting the number of hours that staff worked, according to research.
In a paper presented at the annual conference of the Royal Economic Society yesterday, professors Mark Stewart and Joanna Swaffield claim that paid working hours have fallen by between one and two hours a week for low-income staff.
“The implication is that about one quarter of the increase in basic weekly earnings of minimum wage workers was clawed back by the estimated reduction in basic hours,” the study says.
The minimum wage was introduced in April 1999 at £3.60 for adults and has since risen four times, or by 35%, to £4.85. It is set to rise to £5.05 in October with a further rise to £5.35 in April 2006.
The CBI admitted that a growing number of its members had indicated that they would cut working hours as the minimum wage rises.