The National Minimum Wage (NMW) for adults is to rise by 19p an hour to £6.50, the Government has announced.
Business Secretary Vince Cable said the Government has agreed to follow the three per cent rise proposed by the Low Pay Commission last month.
This will be the first time in six years that the NMW has risen above the rate of inflation.
“The recommendations I have accepted mean that low-paid workers will enjoy the biggest cash increase in their take-home pay since 2008,” said Mr Cable.
Other NMW rate increases from 1 October 2014:
- The rate for 18 to 20-year-olds will rise by 10p to £5.13 an hour (a two per cent rise)
- The rate for 16 and 17-year-olds will increase by 7p to £3.79 an hour (a two per cent rise)
- The rate for apprentices will increase by 5p to £2.73 an hour (a two per cent rise).
The announcement elicited a positive response from business leaders, who saw the increase as striking a balance between protecting jobs and providing a living wage.
Katja Hall, chief policy director at the Confederation of British Industry, said:
“The Government’s decision to accept the Low Pay Commission’s recommendation of a three per cent rise in the National Minimum Wage is a sensible one and will not put jobs at risk.”
Phil Orford, chief executive of the Forum of Private Business, said:
“We are pleased the Government has followed [the Low Pay Commission’s] proposed increase rather than raising the NMW much more dramatically.
“In the context of many rising costs for business, it was important that wages do not become an overbearing burden as businesses seek to invest and grow in the current, improved economic climate. Everyone will benefit from this ability further down the line.”
Dr Adam Marshall, executive director of policy and external affairs at the British Chambers of Commerce, said:
“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.”