An increase in minimum wage rates has come into effect on 1 October 2014, the first cash increase in real terms in six years.
The above inflation rise follows the recommendations from the Low Pay Commission (LPC), which were welcomed by Business Secretary Vince Cable. The adult minimum wage rate has seen a 3% increase (from £6.31 to £6.50 per hour), while the rate for 18 to 20-year-olds as well as the rate for apprentices has gone up by 2% (now £5.13 and £2.73, respectively.)
Earlier this year, the Business Secretary asked the LPC to help Government and business understand how the issue of low wages can be dealt with. The LPC’s assessment suggests that 2014 will mark the start of a new phase of bigger increases, provided economic conditions continue to improve. This is the first time the Government has been provided with a broader evaluation of the issues that affect low pay.
The rate rise means that more than one million of Britain’s workforce are set to see their pay rise by as much as £355 a year.
However, the rate rise is unlikely to have a visible impact on the part-time workforce, namely, students.
Geography student Grant, who works part-time, said the increase in rates isn’t going to affect his financial situation. “Most students work only a few hours a week, and for most, that isn’t the only source of income, so I don’t think this increase will have much of an impact for students” he said.
Law student Mhairi feels more positively about the rate rise though. She said: “It won’t affect me personally as my employer pays above minimum wage, but I still feel like it’s a necessary step considering how many people live below the poverty line. However, she noted: “It also poses the question about whether companies who boast about paying their employees above the minimum wage should increase their current rates respectively.”