March 13, 2014 - Rachel Miller

One million to get pay rise with NMW increase

One million to get pay rise with NMW increaseThe government has approved a rise in the National Minimum Wage to £6.50 per hour, with more than one million people set to see their pay rise by as much as £355 a year.

Business secretary Vince Cable has accepted in full the recommendations of the independent Low Pay Commission (LCP) on raising the rate of the minimum wage for 2014, including plans for bigger increases in future.

The LPC has said the rise – the first cash increase in real terms since 2008 – is manageable for employers and will support full employment. The rise will take effect in October 2014.

The new rates 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 18-20 year olds (from £5.03 to £5.13 per hour);
  • a 7p (2%) increase in the rate for 16-17 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).

Vince Cable said: "The recommendations I have accepted today mean that low paid workers will enjoy the biggest cash increase in their take home pay since 2008. This will benefit over one million workers on National Minimum Wage and marks the start of a welcome new phase in minimum wage policy."

Dr Adam Marshall, executive director of policy and external affairs at the British Chambers of Commerce (BCC), said: "Businesses agree that the minimum wage must rise. We are pleased that the government has accepted the evidence-based approach to the minimum wage increase from the Low Pay Commission, rather than succumb to politically attractive alternatives."

John Allan, FSB national chairman, said: "Most small firms should be able to afford this. To help the smallest firms plan ahead, we would like the Low Pay Commission to take a longer term approach when making recommendations on future minimum wage increases."

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