Minimum Wage in UK to rise to £5.73

The government has announced that the National Minimum wage will rise to £5.73 for workers over 21 – by the end of 2008. This means for a worker on a 40 hour week, their take home pay will be £229 per week. This also attracts top up benefits from the government in the form of family tax credits.

Trades Unions had suggested that the Minimum wage should rise to £6.75 a rate, a rate which would lift workers out of needing government benefits. Employers, predictably, were happy that minimum wages have only increased in line with inflation.

The government announced stiffer penalties for companies who avoid paying the National Minimum wage. There has been concern about a growing number of firms employing immigrant labour and paying them less than the national minimum wage.

  • 66% of workers who receive the minimum wage are women.
  • For 18 to 21-year-olds the NMW will increase from £4.60 to £4.77,
  • For 16 and 17-year-olds the NMW will go up from £3.40 to £3.53.

Benefits of Increasing the Minimum wage

  • Reduce Relative Poverty
  • The minimum wage help to reduce the dependency on benefits and increase the gap between unemployment benefits and wages
  • Since its introduction in 1997, the Minimum wage has not caused any significant unemployment that might have been expected.

Problems of National Minimum Wage

Doesn’t take into account regional variations. e.g. £5.73 will affect few workers in London, but, could be too high in the north and Scotland .

Essay – does a minimum wage solve poverty?

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