Low Pay Commission recommends 3% minimum wage increase

minimum wage

The Low Pay Comission (LPC) has recommended that the government increase the current adult national minimum wage by 3%, to £6.70.

The current national minimum wage for employees of 21 years and over stands at £6.50 per hour. It will remain at this level until October 2015.

Due to the rate of inflation now forecast at 0.5%, this recommendation would, if accepted, be the largest real-terms increase in the national minimum wage since 2007.

It would also expand coverage of the number of jobs covered by the minimum wage to an estimate of more 1.4 million.

The LPC has also recommended increases of: 3.3% to the youth development rate, which applies to 18-20 year olds, an increase of 2.2% in the 16-17 year old rate, and an increase of 2.6% to £2.80 in the apprentice rate.

David Norgrove, chair of the LPC said: “Last year, we were pleased to recommend the first real terms increase in the value of the minimum wage since the recession.

“We argued that the minimum wage had proved its worth over the course of the slowdown, increasing relative to earnings generally and protecting the low paid during the downturn in a way not seen before albeit, as with wages for all other workers, its real value fell.

“Sharp increases in the minimum wage would put jobs at risk, not least bearing in mind pressure on low-paying sectors and small [organisations].

“We do believe however, that the continued recovery and, in particular, the impressive growth in employment of the low paid, should this year allow a further increase in the real and relative value of the minimum wage.

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“We judge that the improved economic and labour market conditions mean once again that employers will be able to respond in a way that supports employment.

“However, our recommendation this year is predicated on a forecast which foresees lower costs for business in fuel and energy, a strong economic performance, significant recovery in earnings across the economy and rising productivity. If these expectations are not borne out over the year, we will take this into account when considering next year’s recommendation.”