The National Minimum Wage is one of the proudest achievements of the last Labour government – raising pay at the bottom without risking jobs. But the National Minimum Wage was originally designed to prevent exploitation and extreme low wages.
Today we face a different problem – because one of the biggest challenges for Britain is that too many people do a hard day’s work but are still living in poverty or relying on in-work benefits to make ends meet:
Over 5 million people, or 1 in 5 employees, are low paid.
Working people are on average £1,600 a year worse off since David Cameron became Prime Minister and the value of the NMW has declined.
We need a new plan for Britain’s future to make sure that work pays for everyday working people. To do this the minimum wage must evolve to address the new, broader problem of low pay that faces us today, not simply extreme exploitation.
That’s why Labour has set out plans to raise the minimum wage to £8 an hour by 2020. This will bring the minimum wage closer to average earnings and affect over one million workers.
The wage rise is based on a proposed target to increase the NMW from 54% to 58% of median earnings by 2020 following consultation with business. Forecasts show that this target will take the NMW from £6.50 in October this year to £8.00 by 2020 – a rise of £1.50 an hour for Britain’s lowest paid workers, worth £60 a week or £3,000 a year for a full time worker on the minimum wage.
International evidence shows that countries can support higher minimum wages without risking jobs. And many of these countries have far lower levels of low pay: Britain has the 5th highest rate of low pay in the OECD. That’s why Labour will ensure that those doing a hard day’s work are rewarded for doing so: raising the minimum wage as part of a national plan to build an economy that works for working people.