Over 1 million of Britain’s lowest-paid workers are set to benefit as new National Minimum Wage (NMW) rates come into force from 1 October 2014.
The rate rise to £6.50 per hour, the first real terms cash increase since 2008, follows the recommendations from the independent Low Pay Commission (LPC) in March this year (2014) and the call for faster, affordable rate rises by Business Secretary Vince Cable.
The National Minimum Wage rates from 1 October 2014, as recommended by the LPC, are:
- a 19p (3%) increase in the adult rate (from £6.31 to £6.50 per hour)
- a 10p (2%) increase in the rate for 18 to 20-year-olds (from £5.03 to £5.13 per hour)
- a 7p (2%) increase in the rate for 16 to 17-year-olds (from £3.72 to £3.79 per hour)
- a 5p (2%) increase in the rate for apprentices (from £2.68 to £2.73 per hour)
The rate rise will mean more than 1 million people are set to see their pay rise by as much as £355 a year.
Business Secretary Vince Cable said:
The National Minimum Wage provides a vital safety net for the lowest paid, ensuring they get a fair wage whilst not costing jobs. This year’s rise will mean that they will enjoy the biggest cash increase in their take home pay since the banking crisis, benefiting over 1 million people in total.
I believe it is vital that the Low Pay Commission’s recommendations - not political considerations - should set national minimum wage rates. As signs of a stronger economy start to emerge, we need to do more to make sure that the benefits of growth are shared fairly across the board. The Low Pay Commission will continue to advise government on future wage rises and ensure the minimum wage keeps pace with inflation.
Earlier this year the Business Secretary asked the LPC to extend its expertise to help government and business understand how we can deal with the issue of low wages in the economy. In particular, he asked it to look at what economic conditions would be needed to allow the National Minimum Wage to rise in the future by more than current conditions allow, and restore its real value.
The Business Secretary welcomed the LPC’s assessment that 2014 will mark the start of a new phase of bigger increases, provided economic conditions continue to improve. It is the first time the government has been provided with a broader evaluation of the issues that affect low pay.
Paying any less than the minimum wage is illegal. If employers break the law the government will take tough action, including enforcing steep financial penalties and publicly naming flouters. Anyone who feels they are being exploited should contact the free and confidential Pay and Work Rights Helpline on 0800 917 2368.
Notes to editors:
- The press notice where the government accepted the Low Pay Commission’s (LPC) recommendations can be found at One million set to benefit from National Minimum Wage rise to £6.50
- If workers feel they are not getting the minimum wage that they are legally entitled to, they should contact the free and confidential Pay and Work Rights Helpline on 0800 917 2368.
- For more information about the changes to National Minimum Wage visit www.facebook.com/nmwage.
- This year’s (2014) increase in the adult rate will increase the real value of the minimum wage for the first time in 6 years through the biggest percentage increase since 2008. The LPC predicts that an increase in line with its recommendation would increase the number of jobs covered by the minimum wage by over a third, to around 1.25 million and would lift NMW workers’ pay relative to other earnings too.
- A worker on the adult minimum wage rate working a 36-hour week, 52 weeks a year would receive £355 a year more in their pay packet under the new £6.50 per hour minimum wage rate as of October 2014. The LPC has said we would need the following conditions to see a faster rise in National Minimum Wage:
- sustainable rise in real wages in the economy generally
- stable or rising employment
- an expectation of sustained economic growth
- The independent LPC was established following the National Minimum Wage Act 1998 to advise the government on the National Minimum Wage. It is made up of representatives from all sides of industry.
- The LPC’s recommendations follow consultation with academics, businesses and workers representatives, together with extensive research and analysis. The LPC’s recommendations on NMW rates reflect unanimous views of all the Commissioners. The LPC monitors and evaluates the impact of the NMW. In reaching unanimity on its recommendations, the LPC has balanced the need to protect the earnings and jobs of low paid workers against the difficulties faced by employers and businesses, paying particular attention to the employment prospects of young people.
- The LPC makes recommendations to the government in its annual report. For more details and copies of the report see the Low Pay Commission’s presence on gov.uk.