Latest Changes to National Minimum Wage

November 19, 2014 3:01 pm Published by

This October the Low Pay Commission directed recommendations to the Government resulting in a 19 pence increase to National Minimum wage. The current rate, now reaching £6.50 per hour, saw a sigh of relief for many.

According to Business Secretary Vince Cable, the National Minimum Wage is a “vital safety net” for low-paid workers across the country where we have seen changes above inflation. This means that more than 1 million people will see an increase of £355 to their pay in the upcoming year.

However, whilst we have seen a 3% increase in wages for those aged 21 and over, and a further 2% for the remaining categories Vince Cable is calling for faster, more affordable rises as many argue it just isn’t enough.

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Increased Cost of Living

Despite increases in the latest changes made by the Government many still argue that the rate doesn’t reflect an increased cost of living.

According to the Resolution Foundation many employees get ‘stuck’ on minimum wage for years and continue to live far beyond their means as a result. Chief economist Matthew Whittaker blames the recession for the fact that wages no longer rise faster than inflation, suggesting that “today’s minimum wage is no higher in real terms than it was almost a decade ago”.

The Living Wage Foundation agree.

The foundation offers an informal benchmark calculating the basic cost of living across the UK. Recommending their own hourly rates the Living Wage has received widespread political support but fairly limited endorsement by employers.

As of November this year those who receive wages in line with the Living Wage Foundation earn £7.85 per hour; that’s 21% more than those subjected to the national minimum wage. The cost of living in London is reflected in recommended hourly rates of £9.15.

According to the group, even their recommendations are basic but an acceptable standard of living which helps to boost staff retention, morale and productivity.

Think about the future but don’t feel left behind

According to the Living Wage Foundation your business can benefit from paying employees more.

Around 80% of employers already implementing the Living Wage have seen results in the increased quality of work and have even seen a drop in the number of absentees.

However, don’t fret just yet.

Whilst we continue to see an increase in employers choosing to pay the living wage to employed and subcontracted staff, the numbers are low at just 1,000 employers across the country. According to The Guardian only 200, or 0.1%, of the UK’s charities have signed up to be living wage employers.

More Information and Help

For more information about changes to the National Minimum Wage take a look at the official Government Website here, or for more about the Living Wage Foundation here.

Alternatively give our team a call at First Call Financials on 0117 379 0810 who are happy to help.

Fran Tyler

Fran heads up First Call Financials. She has over 40 years’ accountancy experience and is a Fellow Member of the Association of Accounting Technicians.

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This post was written by Fran Tyler

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