Proposed minimum wage increase seen as “compromise”

Vince Cable
Vince Cable announced the LPC's recommended minimum wage yesterday - REX/Tal Cohen

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%.

4 Responses to Proposed minimum wage increase seen as “compromise”

  1. CommonSense 28 Feb 2014 at 3:19 pm #

    Agreed that there should definitely be a rise in minimum wage. It should be a rise to a living wage though. I understand that there are 2 sides to the argument and that it is going to cost businesses more but work has to pay. You cannot expect people to be motivated by work if they cannot pay their bills at the end of the month, who would be? Or for the government to top up low paid workers with tax credits as the employer should pay enough to cover this in the first place.
    Perhaps wage increases are not the only thing that needs to be reviewed in order for people to have a better standard of living. There needs to be a general review of prices of goods and how much things cost as if these continue to increase then increases in wages mean nothing to the person receiving them as they will feel no difference in their pocket.
    The culture of business needing to make millions of pounds in profit has fuelled this problem as they squeeze everything in the chain to ensure their profits grow. It is time for a cultural change on this.

    • M morris 28 Feb 2014 at 6:28 pm #

      An increase in minimum wage = an increase in production costs = an increase in goods costs to business sectors and to the public.
      It is a cycle that can not be easily broken.

      • CommonSense 15 Jul 2014 at 11:02 am #

        Yes, I understand your point but if people cannot afford to buy things / products etc because their wages cannot support it then this also doesn’t help anyone, especially businesses. It is a cycle I know but there are plenty of big businesses that make huge profits, undercut smaller businesses and don’t pay their staff even the living wage. It’s about time that these companies start contributing more to everyone to help break the cycle. More can be done by a lot of businesses, they just don’t want to take a hit in profit.

  2. CommonSense 15 Jul 2014 at 11:00 am #

    Yes, I understand your point but if people cannot afford to buy things / products etc because their wages cannot support it then this also doesn’t help anyone, especially businesses. It is a cycle I know but there are plenty of big businesses that make huge profits, undercut smaller businesses and don’t pay their staff even the living wage. It’s about time that these companies start contributing more to everyone.