NMW increase will hit the most vulnerable the hardest
26 February 2014
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For people out of work, the real minimum wage is zero
Commenting on the Low Pay Commission’s recommendation of a 3% rise in the minimum wage to £6.50 from October, Mark Littlewood, Director General at the Institute of Economic Affairs, said:
“This increase will have a negative effect on the people it is meant to help: the young and low-skilled. For people out of work, the real minimum wage is zero.
“The national minimum wage has grown faster than average earnings since 2007 and today’s recommended 3% increase comes at a time when average wages are still growing slowly. Legislated pay hikes such as this are likely to privilege those in work whilst worsening the job prospects for the most vulnerable.
“Whilst the LPC claims to take into consideration the potential effects on employment and firms’ ability to pay, many politicians unfortunately still seem to advocate even higher minimum wages and even more intervention. Policymakers should be focusing on tackling rising living costs to benefit everyone, rather than imposing further cost burdens on business and barriers to work.”
Notes to editors:
To arrange an interview with an IEA spokesperson, please contact Stephanie Lis, Head of Communications: slis@iea.org.uk or 07766 221 268.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
“This increase will have a negative effect on the people it is meant to help: the young and low-skilled. For people out of work, the real minimum wage is zero.
“The national minimum wage has grown faster than average earnings since 2007 and today’s recommended 3% increase comes at a time when average wages are still growing slowly. Legislated pay hikes such as this are likely to privilege those in work whilst worsening the job prospects for the most vulnerable.
“Whilst the LPC claims to take into consideration the potential effects on employment and firms’ ability to pay, many politicians unfortunately still seem to advocate even higher minimum wages and even more intervention. Policymakers should be focusing on tackling rising living costs to benefit everyone, rather than imposing further cost burdens on business and barriers to work.”
Notes to editors:
To arrange an interview with an IEA spokesperson, please contact Stephanie Lis, Head of Communications: slis@iea.org.uk or 07766 221 268.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
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