Election 2017

Reality Check: Where the parties stand on the minimum wage

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It is a number that hits home for most people every month, or perhaps every week.

Wages have a substantial impact on lifestyle, and politicians are keen to show they understand.

So the parties all have policies on the various forms of minimum wage, which are designed to help those on the lowest levels of pay.

Before we look at those polices, let's clarify some terminology.

By law most workers are entitled to the National Minimum Wage and the rate they receive depends on their age.

Currently for 21-24-year-olds the rate is £7.05 per hour, for 18-20 year olds £5.60 and for 16-17 year olds £4.05. The apprentice rate is £3.50.

If you are over 25 the National Living Wage applies to you. That is currently set at £7.50 an hour.

The independent Low Pay Commission advises the government on those rates.

You will also hear a third type of wage referred to - the "real living wage". It is calculated annually by the Living Wage Foundation, an independent group.

The rate, which is not statutory, represents "what employees and their families need to live", and organisations that pay it receive accreditation from the foundation.

For the UK it stands at £8.45 per hour and in London at £9.75 an hour.

What are the parties proposing?

The National Living Wage was introduced by the Conservatives in April 2016.

In its manifesto the party has said it will continue to raise the rate until it reaches 60% of median earnings - which it plans to do by 2020.

According to the Institute for Fiscal Studies (IFS) that would take the rate to £8.75 per hour - 5% higher than if it had been increased in line with average earnings.

For those younger than 25 pay rates will continue to be set by the Low Pay Commission.

In its manifesto the Labour Party has pledged to raise the National Minimum Wage to £10 an hour for all workers aged 18 or over by 2020.

The IFS estimates that would be an increase of 20%, compared with raising all minimum wage rates in line with average earnings.

The SNP said it would press for full devolution of employment policy, including the minimum wage.

It would back a real living wage for all workers above the age of 18.

The Liberal Democrats want an independent review to consult on how to set a "genuine living wage".

The party would apply the wage to all central government departments and would "encourage" other public-sector employers to do the same.

Wages are a big issue in Wales. In its manifesto Plaid Cymru notes that Wales has the lowest wages of any UK nation.

It says it will "fight" for a real living wage.

UKIP has pledged to enforce the existing minimum and living wage and reverse government cuts to the number of minimum wage inspectors in England and Wales.

And, like Labour, the Greens want to increase the minimum wage to £10 an hour by 2020.

What is the impact?

The IFS has looked at the cost to employers of the rises in minimum wages proposed by the Conservatives and Labour.

It concludes that under both parties the minimum wage, relative to average earnings, would reach historic highs.

It says Conservative plans would affect 2.8 million workers and raise the cost of employing them by 4% on average, costing employers £1bn a year.

The Labour plan would apply to 7.1 million workers and raise the costs of employing them by almost 15% on average, at an annual cost to employers of £14bn.

The IFS notes that we do not know at what point higher wages could result in employers hiring fewer staff.


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