by Tim Lezard A bold rise in the minimum wage is needed both for workers and the economy, says the TUC in its submission to the Low Pay Commission (LPC). While the NMW rose above inflation last month for the first time in four years, at £6.50 it is sti …

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A bold rise in the minimum wage is needed both for workers and the economy, says the TUC in its submission to the Low Pay Commission (LPC).

While the NMW rose above inflation last month for the first time in four years, at £6.50 it is still well below the peak of its real value. Had it kept up with rising prices it would be over £7 today.

The TUC, which presents evidence to the LPC today on next year’s minimum wage rates, says the government must increase the minimum wage by more than the rate of inflation to avoid putting even further financial strain on low-wage families. A higher minimum wage will also reduce inequality, which a study by the International Monetary Fund (IMF) shows is associated with weaker growth.

Business leaders, the Treasury and leading politicians from all the main parties have joined the consensus for a faster real terms increase in the value of the NMW, while the Bank of England has also highlighted the need for wage growth.

Corporate profitability has increased during the past year, especially in the service sector where many minimum wage jobs are concentrated, so there is capacity for firms to pay a higher minimum wage.

TUC general secretary Frances O’Grady said: “Britain needs a pay rise and workers on the minimum wage should be first in line. A wages-led recovery is the best chance we have of sustaining economic growth and restoring living standards.

“Politicians from all parties and many business leaders now agree that the minimum wage should increase far more rapidly. The Low Pay Commission will be pushing at an open door if it makes a bold recommendation for a significant rise.”


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Tim Lezard

Campaigning journalist, editor of @Union_NewsUK, NUJ exec member; lover of cricket, football, cycling, theatre and dodgy punk bands

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