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LPC recommends 3% national minimum wage rise

24 February 2015 by
LPC recommends 3% national minimum wage rise

The national minimum wage for workers aged 21 and over should rise by 3% to £6.70 from October 2015, the Low Pay Commission (LPC) has recommended today. The current rate is £6.50 for over-21s.

This rise would be the optimum in terms of protecting as many low-wage workers as possible without damaging the jobs or the economy, the LPC said in its 16th report to the secretary of state for business, innovation and skills, the prime minister, and the deputy prime minister.

It would also be built on the LPC's judgement that economic and labour market conditions are improving, and that businesses are currently facing lower than previous costs for fuel and energy.

It would also increase the national minimum wage to its highest value compared with other wages, said the LPC. Raising the level by this amount would also push up the number of jobs operating on the national minimum wage system to 1.4 million compared with 900,000 at the start of the downturn in 2008.

The LPC also recommended a 3.3% increase to £5.30 for those aged 18-20 (up from £5.13); a 2.6% increase to £2.80 for the apprenticeship rate for first year apprentices or those aged 16-18 in any year of an apprenticeship (£2.73); and a 2.2% increase to £3.87 for those aged 16-17 (up from £3.79).

It also said that the "accommodation offset" needed to be raised by 27p to £5.35, which represents the amount deductible from benefits, and the maximum sum that employers who provide accommodation can deduct towards their costs.

The call comes a year after the LPC's recommendation for the first real terms increase in minimum wage value since 2008.

The hospitality industry is often at the centre of discussions about the national minimum wage, thanks to its large numbers of staff working at this level. Arguments against raising the minimum wage have often focused on suggestions that doing so would see a fall in jobs and competitiveness as a result, with companies sometimes fearing that any rise would force them to pass on steep price increases to the customer, or simply mean small businesses could not remain open.

David Norgrove, chair of the LPC, said: "Sharp increases in the minimum wage would put jobs at risk, not least bearing in mind pressure on low-paying sectors and small firms. We do believe however that the continued recovery, and in particular the impressive growth in employment of the low paid should this year allow a further increase in the real and relative value of the minimum wage."

The Low Pay Commission is an independent body set up to advise the government on the national minimum wage, and monitor its recommendations as and when they go through.

National Minimum Wage rises to £6.31 per hour >>

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