The government has approved a rise in the National Minimum Wage to £6.50 per hour later this year (2014), with more than 1 million people set to see their pay rise by as much as £355 a year.
The rise will take effect in October 2014, as Business Secretary Vince Cable has accepted in full the independent Low Pay Commissionís recommendations for 2014, including plans for bigger increases in future than in recent years.
The Low Pay Commission (LPC) has said the rise, the first real terms cash increase since 2008, is manageable for employers and will support full employment.
The National Minimum Wage rates from 1 October 2014, as recommended by the LPC, will be:
- 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 Business Secretary officially welcomed the LPCís assessment that 2014 will mark the start of a new phase of bigger increases, provided economic conditions continue to improve.
This analysis of the prospects for rises that could restore the value of the National Minimum Wage to its peak in real terms, follows a specific request by the Business Secretary for the LPC to provide forward guidance on what economic conditions would be necessary to allow faster increases in National Minimum Wage without harming employment rates.
It is the first time the government has been provided with a broader evaluation of the issues that affect low pay, and it outlines what kind of economic recovery is needed to ensure greater rises in National Minimum Wage.
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