25 September 2014

Ed Milliband has announced that Labour would increase the minimum wage to £8 an hour, by 2020.



The rise would be implemented in annual stages by the Low Pay Commission, in consultation with business. The increase constitutes a £1.50 rise over 6 years, up from £6.50 an hour (as of October 1 this year).

The proposed deal will see the Low Pay Commission given power to advise the secretary of state for business, innovation and skills if the goals cannot be met without risking jobs and growth.


£8 an hour will exceed the current living wage of £7.65 (for 2014), but will remain well below the London living wage of £8.80 an hour. £8 an hour is below both France and New Zealand’s current minimum wage.

One in five workers in the UK are currently low-paid – defined as earning less than £7.71 an hour (two thirds of the median wage of £11.56 an hour). According to the Low Pay commission, there are 1,386,000 minimum wage jobs in the UK.

UPDATE: Unite is calling for an immediate increase in the minimum wage, to £7.81 an hour.


Unite, drawing on a report by Landman Economics, said that the £1.50 rise from the current rate of £6.31 will generate an estimated £2.1bn in revenues for the public purse and create at least 30,000 jobs.


The increase would benefit around 4.6 million low-paid workers, lifting many out of poverty, as well as increasing spending power to the benefit of local economies.

Len McCluskey, general secretary of Unite, said: “We have long-argued for an immediate uplift in the minimum wage of £1.50 to get people out of poverty and get some real growth into our economy, not this phoney one fuelled by a housing bubble”.

Of course, at IER, while we welcome any proposed increase to low paid workers, we firmly believe that the best mechanism for providing workers with the pay rise they deserve and the economy requires is the introduction of sectoral negotiating forums involving employers and trade unions, as set out in our Manifesto for Collective Bargaining.