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News - 26 February 2014

Low Pay Commission backs minimum wage increase.

The Low Pay Commission has recommended a 3% increase in the minimum wage to £6.50 an hour for adults, which, if accepted, would mean the first increase in real terms since 2008.

The commission added that the economic recovery justified the move, and that if it continued, 2014 would mark a "new phase" of larger increases, but it still had to balance increased costs for businesses against doing more to help the lowest paid.

Stuart Coleman, Manager of the Tax Department of ABDS comments:
"Provided the economy continues to improve, the Low Pay Commission said that it expects to recommend further progressive real increases in the value of the minimum wage, restoring and then surpassing its previous highest level, so that 2014 will mark the start off a new phase of bigger increases."

According to the report, real value of the minimum wage, like average wages, has fallen because it has been exceeded by the cost of living, but it also noted that since the economic downturn the minimum wage has risen faster than other wages.

TUC General Secretary Frances O'Grady said: "This is a welcome increase in the minimum wage, which starts to recover some of the ground it has lost since 2008.”

Shadow business secretary Chuka Umunna MP welcomed the commission's recommendations. "Labour said last year that we need to see above-inflation rises in the minimum wage to restore the value lost over recent years," he added.

Several employers' organisations, the EEF, the CBI and the Forum of Private Business gave the recommendations a cautious welcome.

The British Chambers of Commerce has surveyed its member companies on their attitude towards raising the minimum wage.

Its Executive Director of Policy, Dr Adam Marshall, said: "So while the Low Pay Commission's recommendation appears to be slightly higher than many employers had hoped, it represents a reasonable compromise."

The government usually accepts the Low Pay Commission's recommendations.

The commission's recommendations, which would apply from 1 October this year, also include an increase of 2% for workers aged 18-20 to £5.13 an hour. Those aged 16-17 would see an increase of just under 2%, to £3.79 an hour.

If you need any help and advice with your PAYE or general Bookkeeping, or looking to outsource your Accounting Department, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help in all your business matters.

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