Founding Partner of sister job board GatwickDiamondJobs.com, Mayo Wynne Baxter, discuss the Low Commission’s recent recommendation to increase the national minimum wage. Read on to find out more on the news.
Increase in the minimum wage update
The national minimum wage is set by the Chancellor of the Exchequer each year on the advice of the Low Pay Commission. It is enforced by HM Revenue & Customs (HMRC). The Low Pay Commission has published the executive summary of its 2014 report, which recommends new minimum wage rates. As a result of a perceived improvement in the economic and labour market conditions, they believe the economic recovery should allow an increase in the real value of the minimum wage.
The Low Pay Commission recommends that the adult rate should increase by 3% on 1 October 2014, from £6.31 to £6.50 an hour. It is believed this is likely to increase the number of jobs covered by the minimum wage by over a third to around one and a quarter million. The aim is to have national minimum wage rates that help as many low paid workers as possible but still ensure that it does not damage their employment prospects.
The Low Pay Commission also recommends an increase of 2% in the Youth Development Rate to £5.13 an hour and in the 16-17 year old rate to £3.79 an hour. They also recommend an increase in the Apprentice rate of 2%, or 5p, to £2.73 an hour.
How does the national minimum wage compare with the living wage? The living wage is based on the amount it is thought that an individual needs to earn to cover the basic cost of living. It is an informal benchmark, not a legally enforceable minimum level of pay like the national minimum wage. The living wage is now set at £8.80 an hour in London and £7.65 an hour in the rest of the UK. This means that whilst all parties have looked for a considerable increase to the national minimum wage, it will still fail to match the living wage benchmark.
There is however, the prospect of further increase to the national minimum wage in the future. David Norgrove, Chair of the Low Pay Commission stated , “Provided the economy continues to improve we expect to recommend further progressive real increases in the value of the minimum wage, restoring and then surpassing its previous highest level, so that 2014 will mark the start of a new phase – of bigger increases than in recent years – in the work of the Commission.”
In the meantime the Government is expected to publish the full 2014 report of the Low Pay Commission during the next few weeks.
By Sarah Carr-Locke
Article supplied from Mayo Wynne Baxter: http://www.mayowynnebaxter.co.uk/blog/increase-in-the-minimum-wage-update/