The independent Low Pay Commission (LPC) has recommended that the national minimum wage (NMW) be increased from £6.31 to £6.50 an hour for adults, a rise of 3 per cent.
Business Secretary Vince Cable told ministers this week that, if the Government decides to accept the recommendation, the rise would be the first real increase ahead of inflation since 2008.
Generally speaking, ministers accept the LPC’s recommendations, although the proposed rate is less than the £7 an hour suggested in January by Chancellor George Osborne.
Business organisations have generally welcomed the proposal, with a spokesman for the British Chambers of Commerce (BCC) saying that there has to be a balance between helping low-paid employees without undermining employers’ ability to generate jobs and growth.
However, he added that, as the economy continues to improve, businesses agree that the minimum wage must rise too and, in a recent survey, 60 per cent of chamber members supported an increase in line with current inflation, and fourteen per cent favoured an above-inflation increase.
Therefore, he said, while the Commission’s recommendation appears to be slightly higher than many employers had hoped, as far as the BCC is concerned, it represents a reasonable compromise.
Meanwhile, the CBI said that a rise in the NMW would reflect the improvements currently being seen in the economy and agreed that the LPC has made a sensible judgement on the increase, and not recommended an unaffordable rise that would put jobs at risk.
The TUC also welcomed the proposed increase and hoped that it would be the first in a series of “bolder increases” aimed at helping the low paid. However, the Unite union called the 19p rise a “slap in the face” for those on the minimum wage.