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UK to introduce inflation-busting national minimum wage rise

By Amanda Cooper

Three million people in low-paid jobs will see their pay increase by roughly four times the rate of inflation from April 2020

The British government will raise the national minimum wage for nearly 3 million people in low-paid jobs by an inflation-busting 6 per cent from next April.

From April, the national living wage for adults aged 25 and over will rise by 6.2 per cent to £8.72 an hour, from £8.21 previously. Pay for workers aged 21-24 will rise by 6.5 per cent, while 18-20 year-olds will receive a raise of 4.9 per cent. For 16-17 year-olds the hourly rate increases by 4.6 per cent.

Conservative Prime Minister Boris Johnson hailed this as the “biggest ever cash boost” to the national minimum wage. "For too long, people haven't seen the pay rises they deserve," he said.

"Our government will put a stop to that, giving nearly three million people from Edinburgh to Eastbourne a well-earned pay rise, including the biggest ever cash boost to the national living wage.”

On average, the increase is four times the current rate of inflation in the UK, which is at 1.5 per cent, based on the most recent official data for November and, according to the independent Low Pay Commission, is the largest since the introduction of the national minimum wage in April 2016.

Frances O’Grady, general secretary of the Trade Union Congress, said the rise was long overdue and workers were still not getting “a fair share of the wealth they create".

“In-work poverty is soaring as millions of families struggle to make ends meet,” she said. “No more excuses, working families need a £10 minimum wage now, not in four years’ time,” O’Grady was quoted as saying by the Guardian newspaper.

Katherine Chapman, director of fair-pay campaign the Living Wage Foundation, welcomed the increase but said it fell short of the real living wage, which the charity calculates is £9.30 an hour across the UK.

“There are still more than five million workers in the UK earning less than the real Living Wage and many families will have struggled with extra costs over the holidays, so this increase in the minimum wage provides a vital pay boost,” Chapman said.

“However, there is a still a gap between the government minimum and the real living wage, independently calculated based on what it costs to live.”

Based on the most recent figures from the Office for National Statistics, annual growth in regular pay over the three-month period from August to October was estimated to be 1.8 per cent when adjusted for inflation.

The prospect of an above-inflation increase in minimum hourly pay at a time when economic uncertainty has driven business confidence to its lowest in more than three years.

“Businesses want to pay their staff a good wage. They recognise and support the drive to improve living standards. But many have struggled with increased costs in a time of great economic uncertainty,” said British Chamber of Commerce co-executive director Hannah Essex.

“Raising wage floors by more than double the rate of inflation will pile further pressure on cash flow and eat into training and investment budgets,” she said.

In September UK Chancellor Sajid Javid promised to increase the national living wage towards a target of two-thirds of median earnings by 2024, which is about £10.50 an hour.

FURTHER READING: UK Parliament prepares to pass Brexit bill

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