Proposed Minimum Wage Rise
24 January 2014
Chancellor George Osborne has proposed an above-inflation rise in the national minimum wage.The current rate, which is set at £6.31 for people over the age of 21, has not increased commensurate to inflation since 2008 and has therefore fallen in real terms.
The minimum wage rate is set by the independent Low Pay Commission, which includes representatives of business, unions and academia. It is due to make its latest recommendations on the minimum wage next month.
Business Secretary Vince Cable, who oversees the commission, said ‘I want living standards to go up for the whole country as we fix the economy’.
With inflation set at 2%, the Chancellor’s proposed minimum wage increase is 10% – raising it to £7 an hour by 2015.
However, business representatives are urging caution. Alexander Jackman, Head of Policy at the Forum of Private Business (FPB), said they are ‘opposed to increases in the national minimum wage until theUKhas seen a sustained recovery and businesses are in a position to afford it. We have not yet reached that point’.
Additionally, the Confederation of British Industry (CBI) Director-General John Cridland, agreed with this sentiment, saying, ‘An unaffordable rise would end up costing jobs and hit smaller businesses in particular. Any increase in wages must reflect improved productivity’.