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National Minimum Wage Too Low

Tuesday, March 17, 2015

Missed Opportunity By Government To Uprate National Minimum Wage To £7 From October 2015 To Make Up Ground Lost In Recession

The rate should be at least £6.99 per hour from October 2015 to make up the ground lost since rate was fixed at £5.65 from 1st October 2006 before the recession says GMB.

GMB commented on announcement by government that the adult national minimum wage will increase to £6.70 an hour from October 2015. See notes to editors for copy of statement by The Prime Minister and the Deputy Prime Minister dated 17th March 2015.

Paul Kenny, GMB General Secretary, said “This is a missed opportunity by Government to uprate the national minimum wage to the real term rate that it was before the recession hit in 2007.

With the economic recovery under way there is no justification for the national minimum wage not going back to where it was in real terms before the recession.

The Low Pay Commission should have recommended a rate of at least £6.99 per hour from October 2015 to make up the ground lost since the rate was fixed at £5.65 from 1st October 2006 before the recession. See notes to editors 2 below for calculation.

The Low Pay Commission to do what it says on the tin – “fight for the low paid”.

There has to be a concerted effort to make work pay. If this was done, staff would not need their meagre wages to be topped up by taxpayers with family tax credits and housing benefits so as to make ends meet.

GMB members tell us that in their experience at least £10 an hour and a full working week is needed to have a decent life free from benefits and tax credits. Less than £10 an hour means just existing not living. It means a life of isolation, unable to socialise. It means a life of constant anxiety over paying bills and of borrowing from friends, family and pay day loan sharks just to make ends meet."

End

Contact:  Kamaljeet Jandu 07956 237178 or Martin Smith 07974 251722 or Cath Speight 07506 711925 or 07921 2898880

Notes to editors

1 Press release from Downing Street dated 17th March.

PM AND DPM ANNOUNCE LARGEST REAL-TERMS INCREASE IN ADULT NATIONAL MINIMUM WAGE SINCE 2008

INCREASE OF 20% IN NATIONAL MINIMUM WAGE FOR APPRENTICES

APPRENTICESHIP VOUCHERS INTRODUCED TO PUT EMPLOYERS IN CONTROL OF FUNDING

The Prime Minister and the Deputy Prime Minister have today announced that the National Minimum Wage will increase by 3% to a new rate of £6.70 per hour, effective from October 2015. This is the largest real-terms increase in the National Minimum Wage since 2008, and over 1.4 million of Britain's lowest-paid workers are set to benefit.

The Prime Minister and the Deputy Prime Minister have also announced that the National Minimum Wage for apprentices will increase by 57p an hour to £3.30. This is the largest ever increase in the National Minimum Wage for apprentices and will halve the gap with the National Minimum Wage rate for 16 to 17 year olds, that will be £3.87 an hour from October 2015. The Government will also launch a consultation with businesses on the future of the National Minimum Wage rate for apprentices.

The Government is also putting employers in control of the funding for apprenticeships by introducing a new digital Apprenticeship Voucher. Apprenticeship Vouchers will further simplify things for employers and give them the purchasing power over the Government contribution to apprenticeship funding. The employer would register their details on a system being developed by the Skills Funding Agency including their type of business, the details of the apprentice and the apprenticeship standard being signed up to. The discounted rate, which could be up to 100% for 16-18 year olds, at which employers can purchase training would be calculated and the employer would be able to pass on the voucher code to the provider that is delivering the training for their apprentice. The provider would then reclaim the value of the voucher from the Skills Funding Agency.

Prime Minister David Cameron said:

"At the heart of our long-term economic plan for Britain is a simple idea - that those who put in, should get out; that hard work is really rewarded; that the benefits of recovery are truly national. That's what today's announcement is all about - saying to hardworking taxpayers, this is a Government that is on your side. It will mean more financial security for Britain's families; and a better future for our country."

Deputy Prime Minister Nick Clegg said:

"This is just one of the many ways in which we've created a fairer society whilst building a stronger economy. If you work hard, this government is behind you all the way. Whether you're on low pay or starting your dream career through an apprenticeship, you will get more support to help you go further and faster."

Notes to Editors:

The National Minimum Wage rates from 1 October 2015, as recommended by the LPC, will be:
*       a 20p (3%) increase in the adult rate (from £6.50 to £6.70 per hour)
*       a 17p (3%) increase in the rate for 18 to 20 year olds (from £5.13 to £5.30 per hour)
*       an 8p (2%) increase in the rate for 16 to 17 year olds (from £3.79 to £3.87 per hour)

The National Minimum Wage rate for apprentices will increase by 57p (20%) from £2.73 to £3.30 per hour. The LPC recommended an increase of 2.6% to £2.80 in the Apprentice Rate.

2 Uprating the National Minimum Wage from 1st October 2006 of £5.35 per hour before the recession:

The movement in the RPI from September 2006 to September 2014 has been 28.73%. The estimated RPI inflation rate from September 2014 to September 2015 is likely to be at least 2%. That means the movement in inflation between September 2006 and September 2015 is likely to be at least 30.73%.

To uprate the 1st October 2006 rate of £5.35 by 30.73% requires a total increase of £1.65

So to keep pace with inflation national minimum wage October 2015 should be £6.99.

 

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