ONE of Labour's key pledges, a minimum wage, was finally being fulfilled today - just when ominous clouds begin to gather over a hitherto sunny economy.

The new national minimum rate of £3.60 an hour for most workers is launched as unemployment increases for the first time in two years, with inflation also rising and interest rates going up as a result. Fears of shockwaves from Asia's economic turmoil are fuelling forecasts of a recession ahead.

Will this combination help to bring about all the old Tory forecasts that a minimum wage will lead to the loss of thousands, if not millions, of jobs?

Hardly, we think. Wherever in the industrialised world statutory minimum pay scales have been established, evidence that they destroy jobs has been hard to come by.

However, Labour seems to be nervous. It has, to some extent, watered down the recommendations of the Low Pay Commission. While accepting the £3.60 proposed for most employees, it was widely expected to reduce the rate for 18 to 21-year-olds to just £3. This caution may stem from concern that its New Deal jobs programme for younger workers could be harmed if too high a rate was set, but it also seems to include some circumspection on the overall effects of a minimum wage on employment despite the evidence that such fears may be exaggerated.

It is possible though that, looking at recession over the horizon, the government wishes to minimise possible charges that introduction of minimum pay helped to bring it about.

Perhaps, Labour should be a little less reluctant about taking this step. For inflation-wise and in terms of impact on job creation, the 0.5 per cent increase in country's wage bill is hardly horrendous.

And though this is small and probably tolerable overall, the benefits will be felt by some two million workers at the bottom the pay ladder whose derisory pay will improve - and by the taxpayers who will end up subsidising the poverty-pay employers who have, in effect, been leeching off the state because their workers' wages have had to be subsidised by benefits.

A statutory living wage has been long overdue - if only as a hallmark of a fair society.

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.