20p minimum wage rise recommended


Published: Monday 23rd February 2015 by The News Editor

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The national minimum wage should be increased by 20p an hour to £6.70, the Low Pay Commission is recommending.

The Government is to study the suggestion and make a decision later, possibly in next month’s Budget.

The recommendations for the 2015 rates are £6.70 (adult rate) £5.30 (18-20 rate); £3.87 (16-17 rate) and £2.80 (apprenticeship rate).

Business Secretary Vince Cable said: “Today the Low Pay Commission have made their recommendations to government that the adult national minimum wage should rise by just over 3% to £6.70 an hour from October 2015.

“This would represent an annual pay rise of £416 for a full time worker on the minimum wage. If this recommendation were accepted, the value of the minimum wage would be higher than when we came to office in 2010 and we are now making good progress towards restoring the value it lost during the financial crisis.

“I will now study these recommendations and consult my Cabinet colleagues with a view to announcing the final rates in the next few weeks.”

Mr Cable said the Low Pay Commission had to strike a “delicate balance” between what is fair for workers and what is affordable for employers, without costing jobs.

“It does so impartially and without political interference. No government has ever rejected the main rates since it was established 15 years ago. It is important that it is able to continue to do its work 10 weeks before a general election.”

TUC general secretary Frances O’Grady said: “It is good that the minimum wage is set to go up more than average earnings, but if the recovery is really as strong and sustained as the Chancellor claims, the commission could have been braver and given Britain’s lowest paid workers a bigger boost.

“We also need much bolder action to give those on the lowest pay a fair share of the recovery, including new modern wages councils to set higher minimum rates in industries where employers can afford to pay more.”

Katja Hall, CBI deputy director-general, said: “The LPC has struck a careful balance. As the economic recovery cements, the commission has reconciled a desire to reflect this in pay packets while recognising that productivity growth – the key to sustainable pay rises – remains weak.

“We welcome the commitment to review next year’s rise if the improved business environment doesn’t materialise.

“The national minimum wage has been one of the most successful policies of our time thanks to the independent recommendations of the commission, helping many low-paid workers without damaging their job prospects.

“Any artificial increase due to political expediency will help no one and ultimately damage one of the most successful government policies in recent years.”

The commission recommended that the rate for 18 to 20-year-olds be increased by 17p an hour to £5.30 (+3.3%), the youth rate (16 and 17-year-olds) increase by 8p to £3.87 (2.2%) and the apprentice rate go up by 7p to £2.80 (2.6%).

Conor D’Arcy, policy analyst at the Resolution Foundation, said: “Any time the minimum wage rises faster than prices, it’s a help to the UK’s lowest earners. And it’s welcome that it’s gone up significantly faster than inflation for two years in a row.

“But against a backdrop of steady economic growth, falling unemployment and the expectation of a further pick-up in average wages, the size of the recommended increase will feel a little cautious to many minimum wage earners.”

Published: Monday 23rd February 2015 by The News Editor

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