The government has approved a rise in the National Minimum Wage to £6.50 per hour later this year.
The rise will take effect in October, as Business Secretary Vince Cable accepted in full the independent Low Pay Commission’s recommendations for 2014, including plans for bigger increases in future than in recent years.
The Low Pay Commission (LPC) has said the rise, the first real terms cash increase since 2008, is manageable for employers and will support full employment.
The National Minimum Wage rates from 1 October 2014, as recommended by the LPC, will be:
- a 19p (3%) increase in the adult rate (from £6.31 to £6.50 per hour);
- a 10p (2%) increase in the rate for 18-20 year olds (from £5.03 to £5.13 per hour)
- a 7p (2%) increase in the rate for 16-17 year olds (from £3.72 to £3.79 per hour)
- a 5p (2%) increase in the rate for apprentices (from £2.68 to £2.73 per hour)
Business Secretary Vince Cable said: “The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take home pay since 2008. This will benefit over one million workers on National Minimum Wage and marks the start of a welcome new phase in minimum wage policy.
“The independent Low Pay Commission plays a crucial role in advising the government about the minimum wage. This is why I asked them to look at how we could restore the real value of the National Minimum Wage as the economy recovers.
“The experts will continue to advise government on future wage rises to help the low paid, and in the meantime I urge businesses to consider how all their staff – not just those on the minimum wage – can enjoy the benefits of recovery.”
The Chair of the Low Pay Commission, David Norgrove said: “We have again examined all the evidence very carefully. We believe that the economic recovery should allow an increase in the real value of the minimum wage. Our recommendation that the adult minimum wage should increase by 3 per cent to £6.50 an hour is likely to increase its real value for the first time for at least five years. At the same time it takes account of the pressure the minimum wage places on businesses, particularly in the low-paying sectors and small firms.
“Provided the economy continues to improve we expect to recommend further progressive real increases in the minimum wage, so that 2014 will mark the start of a new phase – of bigger increases than in recent years – in the work of the Low Pay Commission.
“The labour market position of young people has yet to improve to match that of adults, although it now appears to have stabilised. We have recommended increases of 2 per cent in their rates which should broadly protect their real value while increasing the relative attractiveness of young people to employers. We believe that youth rates should rise by more than adult rates when economic circumstances permit.”
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