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Minimum wage up to £6.50 an hour | Minimum wage up to £6.50 an hour |
(about 3 hours later) | |
The national minimum wage will increase by 19p an hour to £6.50, the government has announced. | 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 benefit a million workers. | The new rates will be implemented in October and will benefit a million workers. |
Business Secretary Vince Cable said he had accepted a recommendation from the Low Pay Commission that the minimum wage should increase by 3%. | Business Secretary Vince Cable said he had accepted a recommendation from the Low Pay Commission that the minimum wage should increase by 3%. |
It is the first time in six years that the rise will be higher than inflation. | It is the first time in six years that the rise will be higher than inflation. |
The rate for 18 to 20-year-olds will go up by 10p to £5.13 an hour, a 2% increase. | 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. | 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. | 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 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," said Mr Cable. | "The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008," said Mr Cable. |
'Blunt instrument' | 'Blunt instrument' |
He also suggested that all companies should consider helping their staff to share in the fruits of an improving economy. | He also suggested that all companies should consider helping their staff to share in the fruits 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 said. | "I urge businesses to consider how all their staff - not just those on the minimum wage - can enjoy the benefits of recovery," he said. |
Meanwhile, the man who set up the minimum wage 15 years ago, said it is in need of major reform. | Meanwhile, the man who set up the minimum wage 15 years ago, said it is in need of major reform. |
Professor Sir George Bain, founding chair of the Low Pay Commission, said the benchmark was a "child of its times" when launched in 1999. | Professor Sir George Bain, founding chair of the Low Pay Commission, said the benchmark was a "child of its times" when launched in 1999. |
But speaking to BBC Newsnight on Wednesday, he said it had become a "blunt instrument" and that many employers could now afford to pay their workers much more. | But speaking to BBC Newsnight on Wednesday, he said it had become a "blunt instrument" and that many employers could now afford to pay their workers much more. |
"If you set it at the 'living wage', which is about £7.65 an hour, you would cause massive unemployment in areas like retail and social care," Sir George added. | "If you set it at the 'living wage', which is about £7.65 an hour, you would cause massive unemployment in areas like retail and social care," Sir George added. |
'Special case' | 'Special case' |
"But there's only about five sectors where this is true. There's a whole range of sectors where you could easily afford to pay more than the minimum wage." | "But there's only about five sectors where this is true. There's a whole range of sectors where you could easily afford to pay more than the minimum wage." |
Sir George, who has chaired a review of the minimum wage for think-tank the Resolution Foundation, also said there should be a "special case for London to have a higher national minimum". | Sir George, who has chaired a review of the minimum wage for think-tank the Resolution Foundation, also said there should be a "special case for London to have a higher national minimum". |
His report also recommends that the Low Pay Commission give longer-term forecasts for the benchmark, to help employers plan for the future. | His report also recommends that the Low Pay Commission give longer-term forecasts for the benchmark, to help employers plan for the future. |
The latest rise means 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). | The latest rise means 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 equates to two-thirds of the median full-time hourly wage - about £7.71 an hour. About five million UK workers currently earn below that level. | This equates to 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. | 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," said Dave Prentice, the head of the Unison trade union. | "Across the country, people are struggling to make ends meet," said Dave Prentice, the head of the Unison trade union. |
"The sooner we move to a living wage, the better," he said. | "The sooner we move to a living wage, the better," he said. |
'Timid' | 'Timid' |
In January this year, Chancellor George Osborne said he backed the idea of the national minimum wage reaching £7 an hour by October 2015. | 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 to do so. | The latest announcement could pave the way for that to happen, but it would need a rise of more than 7% next year to do so. |
Unite, the country's biggest trade union, said the rise announced was "timid". | Unite, the country's biggest trade union, said the rise announced was "timid". |
"To make matters even worse, George Osborne cruelly held out hope that the rate would rise to £7," said Len McCluskey, Unite's general secretary. | "To make matters even worse, George Osborne cruelly held out hope that the rate would rise to £7," said Len McCluskey, Unite's general secretary. |
"The government claims it is on the side of working people but companies are sitting on a cash mountain of £500bn and they should be forced to share more of it with the lowest paid," he added. | "The government claims it is on the side of working people but companies are sitting on a cash mountain of £500bn and they should be forced to share more of it with the lowest paid," he added. |