date: 25 September 2008

embargo: 00.01 28 September 2008

Minimum wage increase set to benefit one million workers

Approximately one million workers will benefit when the national minimum wage (NMW) increases to £5.73 per hour on Wednesday 1 October, the TUC says today (Sunday).

Two-thirds of the beneficiaries will be women, reinforcing the NMW's positive role in narrowing the gender pay gap.

The increase in the NMW will also save the taxpayer an extra £245 million in reduced payments of in-work benefits.

Next week's 3.8 per cent increase in the NMW (from £5.52 to £5.73) will be the ninth increase since it was introduced in April 1998. Over the last nine and a half years, the NMW has increased by 59.2 per cent, compared to a 44.2 per cent growth in average earnings.

Annual increases in the NMW since April 1998 have not led to any significant job losses, despite predictions from some business lobbyists. In fact, the latest labour market statistics show that in the year up to June 2008, in which employment growth across the whole economy dropped to just 0.6 per cent (148,000 more jobs), the low paying job sectors - including retail, cleaning and agriculture - grew at twice the pace (1.2 per cent, 102,000 more jobs).

The TUC says that this gives the Low Pay Commission an opportunity to decide a significant increase, above the average rise in incomes, when it sets the October 2009 rate later this year.

While the NMW has helped millions, the TUC's Commission on Vulnerable Employment revealed earlier this year that a significant number of employers are illegally paying less than the NMW. The TUC today renews its call for tougher penalties to deter minimum wage cheats, better resources for enforcement and the extension of the Gangmasters' Licensing Authority regime to other sectors where exploitation is common, including construction, care and hospitality.

TUC General Secretary Brendan Barber said: 'The increase in the minimum wage will help thousands of families but the low-paid face a high inflation rate as they spend a much greater proportion of their income on food and energy where prices have rocketed.

'It is entirely predictable that some employer groups will say that the minimum wage increase will threaten jobs, yet it has helped millions without significant job losses. The Low Pay Commission should robustly reject employer scare-mongering and recognise the higher inflation faced by the low paid when it shortly sets next year's increase.'

'Honest employers do suffer however, when dodgy ones fail to pay the minimum wage. Dodging the minimum wage also leaves the UK's vulnerable workers in even deeper poverty - and we all pay the price for this.

'Tougher enforcement penalties and greater funding for HM Revenue and Customs are the best ways to crackdown on these minimum wage cheats.'

NOTES TO EDITORS:

Historical NMW rates

- The low pay sectors make up about a quarter of the economy. Sectors with a high incidence of low paid jobs include; retail, hotels, catering, bars, textile manufacturing, hairdressing, cleaning, security, agriculture, food processing.

- The NMW is enforced by HM Revenue and Customs. Figures for beneficiaries and benefit savings are from the Low Pay Commission.

- From Wednesday 1 October, the adult minimum wage will increase to £5.73 an hour from £5.52. Workers aged 18-22 will get £4.77 (£4.60) and those aged 16 and 17 will get £3.53 (£3.40).

- Employers can be fined up to £5,000 per offence under the National Minimum Wage Act. HM Revenue and Customs National Minimum Wage Helpline: 0845 6000 678 Monday-Friday 09:00-17.00 (calls charged at local rate).

Contacts:

Media enquiries

Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk

Press release (700 words) issued 28 Sep 2008