Question

To ask the Secretary of State for Business, Innovation and Skills, what assessment the Government has made of the potential effect on productivity of increasing the minimum wage.

The Government will publish a full Impact Assessment alongside draft regulations to implement the National Living Wage.

As noted in Summer Budget 2015, at a firm level there is some evidence that previous increases in minimum wages in low paying firms may have been associated with increases in productivity.

Additionally, the Office for Budget Responsibility has published an estimate of the aggregate impact on productivity due to compositional change in the economy. They estimate an increase in hourly productivity in 2020 of 0.3 percentage points through this mechanism.