UK National Minimum Wage

Should the minimum wage keep rising?

Today Programme

BBC Radio 4

coffee shop worker
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The Chancellor has also been discussing the Resolution Foundation report out today which suggests low pay could be eliminated in the UK in the next five years or so.

Progress in reducing low pay over the last few years is explained in part by the introduction and steady increase in the level of the minimum wage.

So the question is, should the minimum wage continue to rise after 2020?

"We would only do that if we can be confident that we can do that without damaging the employment prospects of people with lower skills," says Mr Hammond.

He points out that initial fears back in the 1990s that the minimum wage would cost jobs were never realised, but says that doesn't mean further rises might not be damaging. So he's commissioning a review.

"The key challenge is to support businesses so they can raise their productivity performance as the wages of their employees rises," he says.

"Then you get a virtuous circle, where increases in the minimum wage incentivises improvements in productivity, which in turn allows employers to to pay higher wages still.

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Minimum wage, maximum support

BBC Radio 5 Live

Matthew Taylor
BBC

Matthew Taylor, who was head of Tony Blair's policy unit when the minimum wage was first introduced 20 years ago, has been reminding Radio 5 Live listeners of the level of opposition to the idea when it was first mooted.

Everyone from The Economist newspaper to the trades unions warned putting a floor under wages would cost jobs.

"At the time it was introduced it was a controversial policy," says Mr Taylor.

It didn't turn out that way of course. The UK's enjoying record levels of employment and there have been some notable about-turns.

"Now everybody is a supporter," he says.

Even the chancellor Philip Hammond it seems. He was also against the idea back then, but has now commissioned a review that could well lead to it rising more quickly.

Minimum wage rates rise today

Cafe worker
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In Britain the minimum wage rates are rising today to give around two million workers a pay rise.

The new minimum wage rates are:

  • National Living Wage - for 25-year-olds and over: £8.21 an hour (up from £7.83 - a 4.9% rise)
  • Minimum wage - 21 to 24-year-olds: £7.70 an hour (up from £7.38 - a 4.3% rise)
  • Minimum wage - 18 to 20-year-olds: £6.15 an hour (up from £5.90 - a 4.2% rise)
  • Minimum wage - 16 to 17-year-olds: £4.35 an hour (up from £4.20 - a 3.6% rise)
  • Apprentice rate: £3.90 an hour (up from £3.70 - a 5.4% rise)