ABSTRACT
This chapter assesses the nature of 'regulatory shock' on small firms in particular, based on a longitudinal research project conducted under the ESRC’s Future of Work programme. The National Minimum Wage (NMW) was introduced from April 1999 with a minimum adult hourly rate of pay of £3.60 and a lower youth rate for workers aged 18 to 21 inclusive of £3.00. The chapter reviews some of the empirical findings of the study into the impact of the NMW on small firms. It discusses the implications in terms of a revised form of Hirschmann’s model. Most hotel and catering firms implemented the NMW without any major difficulties, for three main reasons. Some clothing firms were able to respond to the pressures of deteriorating business and the NMW by making a shift to specific niche markets. Many clothing firms found that implementation of the NMW was complicated by their use of piecework payment systems.
