Government approves minimum wage rise

The government has approved an increase in the national minimum wage (NMW), which will come into force in October this year.

The rate for over 21-year-olds will increase 3%, from £6.31 to £6.50 per hour, while the rate from 18- to 20-year-olds will increase 2%, from £5.03 to £5.13 per hour.

There is also a 2% increase in the rate for 16- to 17-year-olds and apprentices, from £3.72 to £3.79 per hour and £2.68 to £2.73 per hour, respectively.

Business secretary Vince Cable accepted in full the independent Low Pay Commission’s (LPC’s) recommendations for 2014, which look set to see more than 1 million people benefit from the increases.

Cable said: "The recommendations I have accepted today (12 March 2014) mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008. This will benefit over 1 million workers on the national minimum wage and marks the start of a welcome new phase in minimum wage policy.

"The LPC’s new forward guidance gives us a much better understanding of how an economic recovery can be translated into faster and significant increases in the national minimum wage for low paid workers, without costing jobs."

He added that he urged businesses to consider how all their staff – not just those on the minimum wage – can enjoy the benefits of recovery.

David Norgrove, chair of the LPC, said: "We believe the economic recovery should allow an increase in the real value of the minimum wage. Our recommendation that the adult minimum wage should increase by 3% to £6.50 an hour is likely to increase its real value for the first time for at least five years.

"Provided the economy continues to improve, we expect to recommend further progressive real increases in the minimum wage, so that 2014 will mark the start of a new phase – of bigger increases than in recent years – in the work of the Low Pay Commission."

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