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Behind the headline: New National Minimum Wage targets decoded

Posted: 2019-10-01 12:49:53

Monday’s announcement by the Chancellor, Sajid Javid, that the top bracket of the National Minimum Wage will reach £10.50 by 2024 is welcome news.  The announcement is a development of the policy announced by the then Chancellor, George Osborne, that by 2020 the top bracket of The Minimum Wage would be £9.

The new policy will see millions more workers eventually receive a pay rise due to the increase in the target from 60% of median earnings to 66% and the lowering of the eligibility for the top rate from 25 years old to 21 years old.  If this increase goes to plan the UK will have one of the highest minimum wages in the world. The graph below from the Resolution Foundation shows the projected impact on wages the new approach aims to deliver compared to the original policy.

 

 

While welcome, this announcement will still not deliver a real Living Wage that is based on the real cost of living.  Rather, the UK Government’s approach is to tie the rate to median earnings and not to the cost of living.  This means that any slowdown in earnings will depress minimum wage rates.  At a time when the UK economy’s future seems uncertain, continued growth of earnings should not be taken for granted.

Monday’s announcement, together with Labour’s commitment to a £10 National Minimum Wage shows that there is a consensus that workers need a pay rise. At Living Wage Scotland, we believe that this pay rise can be delivered immediately by employers who have the means. 

Almost 1600 employers in Scotland have already committed to paying a rate that goes beyond the minimum for direct employees and contracted workers by becoming accredited Living Wage employers. They pay a rate that is calculated according to the cost of living.  And with 380,000 workers in Scotland earing less that the real Living Wage today the need for a pay rise is acute. We urge employers not to wait for changes in the law, but to pay workers a real Living Wage now. 

For information on how your organisation can become a Living Wage employer, get in touch with us via our website: https://scottishlivingwage.org/contact/get_accredited

 

Jack Evans 

Living Wage Scotland 

 

 

0141 353 0440

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