Minimum wage increase is the biggest real-terms rise for seven years

25 March, 2015

The minimum wage will rise by 20p to £6.70 an hour this October, benefiting 1.4 million low-paid workers.

It is the biggest real-terms rise in seven years, while rates for younger workers and apprentices will also go up.

The hourly rate for 18- to 20-year-olds will increase from £5.13 to £5.30 (three per cent) and by 8p to £3.87 for 16 and 17-year-olds (two per cent).

The statutory minimum for apprentices will jump by 57p to £3.30, an increase of 20 per cent.

The shift represents the largest real-terms increase in the rate since 2008 but is not enough to restore the rate to its value before the financial crash.

The Trades Union Congress said the low paid workers in line for an increase were also those who had been hardest hit by Coalition cuts.

But David Cameron said: “It will mean more financial security for Britain’s families; and a better future for our country.”

Deputy Prime Minister, Nick Clegg, added: “This is just one of the many ways in which we’ve created a fairer society whilst building a stronger economy.”

Labour wants to raise the minimum wage to eight pounds by 2020. “Under David Cameron we’ve seen the value of the minimum wage eroded, we need a recovery for working people,” Labour’s business spokesman Chuka Umunna said, reacting to the increase.

In February, the Low Pay Commission, a body made up of trade unionists, academics and businesses that advises the government, said continued economic recovery allowed a bigger increase in pay after inflation than in previous years.

When it made this latest recommendation, the LPC said: “We have carefully weighed the risk of doing too little to raise the earnings of the lowest paid against the risk of recommending more than business and the economy can afford.”

About five per cent of Britain’s workforce is paid at or very close to the minimum wage, and almost a third of workplaces use it as a guide for setting wages, especially in the retail and hospitality sectors.

At Watson Buckle, we can provide comprehensive services to support employers with their minimum wage obligations, including providing payroll services.

For more information, please contact us.