More than a million workers in the UK will see a rise in their wages to £6.50 per hour by the end of this year, the Department for Business, Innovation and Skills (BIS) revealed on Wednesday.
The Low Pay Commission (LPC), an independent body that advises the government about the National Minimum Wage, submits a report to the government each February making recommendations on the future level of the minimum wage, and related matters. It recommended the increase to the National Minimum Wage, which has been accepted in full by Business Secretary Vince Cable. Plans for bigger increases in future compared to recent years, have also been approved by the government.
The rise will take effect in October and it means that workers could receive up to £355 more per year in their pay packets. The Low Pay Commission (LPC) has said the increase is the first in real terms since 2008 and is manageable for employers. The higher National Minimum Wage rate is also expected to support full employment.
Extensive research and analysis into the National Minimum Wage was conducted by the LPC, which also consulted with academics, businesses and workers representatives. The Commissioners were unanimous in their recommendations, which are said to balance the need to protect the earnings and jobs of low-paid workers against the difficulties faced by employers and businesses, while also focussing on the employment prospects of young people.
From 1 October 2014, the adult National Minimum Wage will increase by 3%, from £6.31 to £6.50 per hour. For workers aged 18 to 20, there will be a 2% increase, from £5.03 to £5.13 per hour.
Younger workers aged from 16 to 17 will receive an increase of 2%, up from £3.72 to £3.79 per hour, while rates for apprentices will also increase by 2%, from £2.68 to £2.73 per hour.
The Business Secretary stated: “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 LPC’s new forward guidance gives us a much better understanding of how an economic recovery can be translated into faster and significant increases in the National Minimum Wage for low paid workers, without costing jobs.”