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date: 28 October 2009

embargo: 00.01hrs Thursday 29 October 2009

TUC calls for £6 an hour minimum wage

The TUC will argue that the Low Pay Commission (LPC) should recommend raising the adult National Minimum Wage (NMW) by 20p to £6 an hour when the two organisations meet to discuss the new rate for the NMW tomorrow (Friday).

The LPC, which advises Government on the NMW, is currently considering the rates for the period from October 2010 to September 2011. The TUC will recommend that this 3.5 per cent rise in the adult NMW is both sensible and affordable.

The TUC believes that:

• an increase in the NMW is required to ensure that the earnings of low paid workers do not fall behind the rest of the country. Average earnings are expected to increase during the period that will be covered by the next LPC recommendation, so too small a rise in the NMW would leave working families in poverty;
• furthermore, if we are to win the battle against low pay, the new NMW rate needs to go beyond just keeping pace with average earnings and deliver a 'social justice' premium;
• the 20p increase would benefit around one million vulnerable workers and help address the gender pay gap, as two in three (66 per cent) of those benefitting will be female. Women workers, workers from ethnic minority backgrounds, those with disabilities, and younger and older workers are among the groups who will benefit most;
• although the recession has posed a very serious challenge, economic growth and recovery is predicted for the period the LPC is considering so the raise can be easily absorbed;
• a boost in the NMW would help to stimulate consumer spending, as low paid workers tend to spend nearly all of their NMW increases in the local economy. The 20p per hour increase in the NMW would generate around £400 million worth of extra spending, which would help offset the cost of the increase;
• to underpay the NMW and not set it at the highest sustainable rate would have an impact of £200 million on public finances - already under pressure - through the need for greater subsidy of low pay via tax credits and in-work benefits.

TUC General Secretary Brendan Barber said: 'It is predictable that some employer groups are saying that any increase in the minimum wage will threaten jobs and that £6 is too much.

'However, raising the minimum wage has already helped thousands of families without causing significant job losses. The effect of a further reasonable increase on employer pay bills will be modest, and companies should find them easy to absorb.

'Economic growth is predicted to return during the period that the Low Pay Commission is considering. Earnings should grow and unemployment should fall. An increase in the minimum wage is required to ensure that working families are not left in unnecessary poverty.

'The recession was caused by highly paid people damaging the nation's financial system. It would not be fair to make the low paid suffer a freeze in wages while city bankers still get bonuses, and when there is no economic necessity to do so.

'The Low Pay Commission should robustly reject employer scare-mongering and recommend the highest minimum wage increases that can be sustained.'

NOTES TO EDITORS:

- The TUC will present its oral evidence on the NMW to the LPC at 2pm tomorrow (Friday).

- The adult minimum wage is currently £5.80. Workers aged 18-20 get £4.83 and those aged 16 and 17 will get £3.57. The TUC recommends those rates are raised to £6, £5 and £3.69.

- 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 (HMRC). Employers can be fined up to £5,000 per offence under the National Minimum Wage Act. The Pay and Work Rights helpline gives advice on the minimum wage and other employment rights and can pass cases to the HMRC for enforcement. The number is 0800 917 2368.

- All TUC press releases can be found at www.tuc.org.uk

- Register for the TUC's press extranet: a service exclusive to journalists wanting to access pre-embargo releases and reports from the TUC. Visit www.tuc.org.uk/pressextranet

Contacts:

Media enquiries:
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Brenchley T: 020 7467 1337 M: 07900 910624 E: ebrenchley@tuc.org.uk

Press release (800 words) issued 29 Oct 2009