The TUC has laid out a roadmap to a £15 an hour minimum wage and a “high-wage economy”, declaring “it’s time to put an end to low-pay Britain”.
In a report – Raising pay for everyone – the union body details the path to a £15 minimum wage and calls on the government to deliver it as soon as possible, over time.
Currently the national living wage (NLW) rate, available to workers aged 23 and over, is £9.50. Younger people are eligible for lower rates.
Since its introduction in April 1999 the rate of the national minimum wage rate has been set by the Low Pay Commission (LPC), based on targets that relate to the UK’s average wage. Initially the target was 47% of median earnings, but the current goal is for the NLW to reach 66% of earning by 2024.
With the 66% target looking “almost certain” to be achieved, the TUC said a more ambitious target of 75% is the “logical next step”.
TUC general secretary Frances O’Grady said: “For too long workers have been told that businesses can’t afford to pay them more. But again and again the evidence has shown that firms are still making profits and increasing jobs – we can afford higher wages.”
On the need for a real plan for a high-wage economy, she added: “Ministers promised a high wage economy time and time again, but they need a real plan to deliver it – not just a convenient political slogan.”
The TUC is calling for all workers – regardless of age – to be eligible for the same minimum wage, removing the current lower rates for young workers. The union body says this should be done alongside progress towards a £15 minimum wage.
With families facing “a desperate autumn and worse winter”, the TUC is calling for the minimum wage uprating to be brought forward to October – and increased at least by inflation – as opposed to April next year when the uprating was due.
The announcement of the new 2022-23 “real” living wage rate, set independently by the Living Wage Foundation and followed voluntarily by more than 10,000 employers, has been brought forward to September from November.
The researchers said that recent progress on the minimum wage has been dampened by stagnant wage growth. “It is only since the financial crisis that wage growth has stalled. Workers are currently experiencing the longest and harshest pay squeeze in modern history. Real wages have fallen significantly behind the post-war trend. And with inflation currently on its way to 13%, real pay is plummeting further. We are set to see the fastest fall in real wages for 100 years later this year.”
The TUC said that minimum wage growth have been delivered consistently without increasing unemployment – in fact, in recent years as the minimum wage has been hiked faster than before, the UK has maintained high levels of employment.
The union body said the LPC should be tasked with charting the exact path to £15 – adding that the model provides “a safe mechanism” for establishing evidence around how high we can push the minimum wage.
Ministers promised a high wage economy time and time again, but they need a real plan to deliver it – not just a convenient political slogan” – Frances O’Grady, TUC
The report says that workers need to see a return to at least the nominal wage growth of 3.8% that was seen during 1997 to 2009.
But, Matthew Percival, director of skills and inclusion at the CBI, said there should not be a new target for the minimum wage and that any rise should relate to productivity and growth.
“Firms are increasing wages where they can, but energy price rises are pushing some to the brink. High energy prices require urgent government action to support households and businesses, not relying on the minimum wage alone,” he told the BBC.
An LPC consultation on the national living wage, which closed in June, sought employers’ opinions on the affordability of an increase in April 2023 to an NLW rate of £10.32 (within a range of £10.14 and £10.50), however commissioners acknowledged that a “combination of uncertainty and compositional effects make establishing the level of the on-course rate more difficult to predict than in previous years”.
Based on the forecasts, published in March before the scale of inflation was fully known, the LPC’s projection for the April 2024 NLW rate was £10.95 (within a range of £10.58 and £11.33). The age threshold for the NLW is also due to come down to 21 by 2024 at the latest.