The Low Pay Commission’s (LPC’s) proposal for an above-inflation increase in the national minimum wage has been broadly welcomed by employers’ groups and unions.
Business secretary Vince Cable announced the LPC’s recommendation of a £6.50 adult rate for the national minimum wage, which is a 3% increase, yesterday in Parliament. Cable said the rise would “be the first real increase, ahead of inflation, since 2008 and the biggest cash increase since 2008”. He stressed that the figure is a recommendation, not a government decision.
LPC chair David Norgrove said: “We have had to balance the risk of recommending more than business and the economy can afford, bearing in mind the pressures on low-paying sectors and small firms, against the risk of doing too little to start to restore the real value of the earnings of the lowest paid.”
He added that the proposed rise would increase the number of jobs covered by the minimum wage by more than one-third to 1.25 million.
TUC general secretary Frances O’Grady said: “This is a welcome increase in the minimum wage, which starts to recover some of the ground it has lost since 2008.
“We hope this is the first in a series of bolder increases that will give real help to the low paid, and not just a pre-election boost.”
Katja Hall, chief policy director at the CBI, said: “A 3% rise recognises the improvements we’re currently seeing in the economy. The LPC has made a sensible judgment on the increase, and not recommended an unaffordable rise that would put jobs at risk.”
Dr Adam Marshall, executive director of policy at the British Chambers of Commerce, said: “While the LPC’s recommendation appears to be slightly higher than many employers had hoped, it represents a reasonable compromise.”
The Government is expected to publish the full 2014 LPC report during the next few weeks. The LPC also recommended that the youth rate and the apprentice rate should be increased by 2%.