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Minimum wage to increase above the rate of inflation


The government has announced that the national minimum wage will increase by 3% to £6.50 an hour.

It is the first time that the national minimum wage has increased at a higher rate than inflation in six years, and it expected that it will directly benefit one million workers in the UK.

Additionally, minimum wage workers under the age of 21 will also benefit from similar pay rises of 2%, which is around the same as inflation as the Consumer Prices Index (CPI) rate of inflation currently stands at 1.9%.

The rate for those aged between 18 and 20 will increase by 10p to £5.13 an hour, whilst 16 and 17 year olds will see the minimum wage rise by 7p to £3.79 an hour. Apprentices will also benefit from the pay rise, as they will now earn an extra 5p, taking their wages to at least £2.73 an hour.

Business Secretary Vince Cable, who accepted a recommendation of the 3% pay rise from the Low Pay Commission, said that: "The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008."

He also went on to encourage other businesses to offer pay rises to those not on the minimum wage by stating "I urge businesses to consider how all their staff - not just those on the minimum wage - can enjoy the benefits of recovery."

National ‘living’ wage

However, the latest pay rise still means that the national minimum wage is still considerably below the national ‘living’ wage, which is currently set at £7.65 an hour by the Organisation for Economic Co-operation and Development.

Sir George Blain, the man who set up the minimum wage 15 years ago suggested the minimum wage was now a ‘blunt instrument’ and it was in need of major reform.

Sir George commented that if the ‘living wage’ was introduced as the minimum wage, it would cause unemployment in some struggling industries such as retail and social care, but other sectors “could easily afford to pay more than the minimum wage.”

Earlier this year, Chancellor George Osborne commented that he was in support of the idea of the national minimum wage reaching £7 an hour by October 2015.

Whilst it is still possible for this to happen, there would need to be an increase of 7% next year in order to meet this benchmark.


The biggest trade union in the country, Unite, branded the pay rise as “timid”, whilst key figures within the union also spoke ill of the increase.

Len McClusky, General Secretary of Unite commented: "To make matters even worse, George Osborne cruelly held out hope that the rate would rise to £7. The government claims it is on the side of working people but companies are sitting on a cash mountain of £500bn and they should be forced to share more of it with the lowest paid."

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