Despite suggesting that the United Kingdom’s national minimum wage could rise as high as £7 per hour in 2014, reports this week suggest that Chancellor George Osborne has failed to secure an increase of this scale. Instead, the rate is set to rise by just £0.19p, from £6.31 to £6.50.
Noting a 3% increase on recommendation by the Low Pay Commission, the governing body which acts to set the ideal level, business secretary Vince Cable broke the news to MPs earlier this week. Despite falling far short of the figure previously projected by the Chancellor, the increase will mark the first time the minimum wage has been above the level of national inflation since 2008.
Addressing MPs in parliament, Mr Cable said: “It is faster than inflation and that is the first time in six years that has happened”. Despite the impending hike however, general opinion is as apathetic as it has been over the course of the (referred-to) six year period- with a 3% rise unlikely to make much of an impact in the lives of most Brits earning the lowest rates of pay.
‘Fixing the Economy’
Back in January, in parliament Mr Osborne stated: “Because we are fixing the economy, because we are working through our plan I believe Britain can afford an above-inflation increase in the minimum wage so we restore its real value for people and we make sure we have a recovery for all and that work always pays.”
He continued: “The exact figure has to be set by the Low Pay Commission, which talks to business, talks to other bodies in our economy. It’s £6.31 at the moment, so, that’s an increase. I think we can see an above inflation increase in the minimum wage and do it in a way that actually supports our economy precisely because the economy is recovering and many, many jobs are being created."
In the same address, Mr Osborne speculated towards the possibility of the minimum wage for those above the age of 21 being raised to a flat £7 per hour on a UK-wide basis. Falling short by £0.50p however, it seems the workers that the entire premise of the minimum wage is meant to protect, will have to wait for now. With the proposed change set to take place this autumn, there's still plenty of time for inflation to have the final say on just how reasonable the raise is.
"Of course, we have got to make the exact calculation of what the rate should be. But, when I look at the British economy I see the British economy expanding, I see jobs being created, I see the prospect of future jobs being created as well- and I think Britain can afford a higher minimum wage.”
A Living Wage
Despite the Chancellors previous confidence on the issue, many are failing to see the significance of a rise of this scale. Had the figure been boosted to £7 as hinted, this would have been a rise of almost 11% of the current rate. Regardless, trade unions are insistent that this wouldn’t have been enough to match the ‘living wage’ that campaigners regard as the level required to meet basic needs. As it stands, this rate is set at £8.80 for those living within London and £7.65 for the remainder of the United Kingdom.