National minimum wage should rise to £6.14, says TUC

The TUC will tell the Low Pay Commission (LPC) to recommend raising the adult national minimum wage next year by 21p to £6.14 an hour when the two organisations meet on 1 November.

The TUC will tell the LPC, which advises the Government on the minimum wage, that a 3.5% rise is both “sensible and affordable”.

In its submission to the LPC the TUC argues that:

  • The 21p increase would benefit nearly one million workers and help address the gender pay gap, as two in three of those benefitting would be women. Female workers, employees from ethnic minority backgrounds, those with disabilities, and younger and older workers are among the groups who will benefit the most.
  • GDP growth has now returned and, despite the cuts in government spending, is forecast to continue throughout 2011 and 2012, which is the period that the LPC is considering.
  • An increase in the minimum wage is required to ensure that the earnings of low paid workers do not fall behind the rest of the country. Although predictions suggest that inflation will fall next year, retail prices index inflation is still likely to average 3.5% throughout 2011, so too small a rise in the minimum wage would leave working families in poverty.
  • Increasing the minimum wage encourages people into work and boosts consumer spending as low paid workers tend to spend nearly all of their wage increases in their local economy.
  • Failing to set the minimum wage at the highest sustainable rate by making employers pay as much as they can afford would cost public finances approximately £360 million. The TUC estimates that if the minimum wage was to be increased by 3.5% next October, workers on the minimum wage would be paying £235 million more in income tax and national insurance. The increase would also save the Government £125 million in tax credits and in-work benefits at a time when public finances are being cut, says the TUC.

TUC general secretary Brendan Barber said: “A rise in the minimum wage is needed to ensure that working families are not left in poverty, and most business organisations now agree that an increase of some sort would be affordable.

“It would certainly not be fair to make the low paid suffer real cuts in their pay when there is no economic necessity to do so, and while city bankers are still getting huge bonuses.”

Sheila Attwood, XpertHR pay and benefits editor, said: “A 3.5% increase in the national minimum wage in 2011 would be close to the expected increase in prices measured by RPI inflation. However, it would be well above the pay rise received by the majority of employees, which is forecast to be around 2%.”

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