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Minimum wage rises up to £6.50 an hour

posted 13 Mar 2014, 04:13 by Richard White   [ updated 26 May 2015, 04:47 ]

A million workers will receive their first real-terms rise for six years

The national minimum wage will increase by 19p an hour to £6.50, the government has announced. The new rates will be implemented in October and will be to the benefit of a million workers.

Business Secretary Vince Cable confirmed he had accepted a recommendation from the Low Pay Commission that the minimum wage should increase by 3% and for the first time in six years that the rise will be higher than inflation.

Key points in the changes are as follows:
  • The rate for 18 to 20-year-olds will go up by 10p to £5.13 an hour, a 2% increase.
  • The rate for those aged 16 and 17 will rise by 7p to £3.79, also a 2% rise.
  • Apprentices will earn an extra 5p an hour, taking their wages to at least £2.73.
  • The consumer prices index (CPI) rate of inflation is currently 1.9%.
"The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008," declared Mr Cable.

He also put forward the suggestion that companies should consider helping their staff to share in the benefits of an improving economy.

"I urge businesses to consider how all their staff - not just those on the minimum wage - can enjoy the benefits of recovery," he suggested.

Despite this latest rise, the national minimum wage is still well below the definition of low pay, as set by the Organisation for Economic Co-operation and Development (OECD).

This represents two-thirds of the median full-time hourly wage - about £7.71 an hour. About five million UK workers currently earn below that level.

The latest figure is also well below the living wage, which is £8.80 per hour in London, and £7.65 in the rest of the country.

"Across the country, people are struggling to make ends meet,"  commented Dave Prentice, the head of the Unison trade union. "The sooner we move to a living wage, the better," he said.

In January this year, Chancellor George Osborne said he backed the idea of the national minimum wage reaching £7 an hour by October 2015.

The latest announcement could pave the way for that to happen, but it would need a rise of more than 7% next year in order to do so.