Mr. Seamus Coffey:

Some US states have adopted a minimum wage but, by and large, it tends to be a voluntary code. It is established what is a living wage which is then put into legislation. It has a slightly different standing to a minimum wage. There is no legislative authority for companies to pay it. Although many companies sign up voluntarily, I would imagine most of them are where the pay rates already exceed the living wage. In the state of Washington, particularly in the city of Seattle, we will get an experiment as to whether the living wage actually becomes the statutory minimum. It will set up a small area within the state where it will require all companies to pay. Again, this will give us the data to see if it does have an employment effect. However, as it has only happened in the past eight months, it will take some time to feed through to see the impact.

In the US, the living wage has much traction but does not quite have the traction to become the minimum wage. It has become a voluntary code up to which employers can sign. One issue with the living wage is that individual circumstances differ. Comparing a living wage for a student who just wants ten to 15 hours of part-time work to someone trying to run a household is not entirely appropriate.

We use the EU as a benchmark because our economies are similar. There are not substantial differences in our tax and transfer systems. Over the next 12 to 18 months, we will see the living wage still have an impact. I do not believe the voluntary code will have much of an impact but if we follow what is happening in Seattle we may learn something.