British minister: minimum wage must rise further to lift living standards

Reuters News
Posted: Sep 13, 2013 6:17 PM

By Costas Pitas

LONDON (Reuters) - British Business Secretary Vince Cable said in an interview published on Friday that he will press a government commission to raise the minimum wage to ensure it is keeping up with the cost of living.

Cable believes the minimum hourly rate, which will rise to 6.31 pounds ($10.01) for those aged 21 and over from October 1, has fallen in real terms by up to 12 percent since the 2008 financial crisis.

"We cannot go on forever in a low pay and low productivity world in which all we can say to workers is, 'You have got to take a wage cut to keep your job,'" Cable told The Guardian in an interview published on its website Friday.

"For a very long time, five or six years, wages have been suppressed in low wage sectors. I am sending a signal that we are entering a very different environment."

Cable hopes the increases would come into force over the next two to four years with Britain's minimum wage first introduced at 3.60 pounds ($5.71)an hour in 1999.

He said companies could be compensated for the extra costs of higher wages with a cut in the level of national insurance contributions paid by employers toward employee pensions and other state benefits.

The comments come as living standards are shaping up to be a key electoral issue ahead of national polls expected in spring 2015.

As the British economy appears to recover, many workers feel they are not reaping the benefits due to pay cuts and wage freezes since the 2008 financial crisis.

The Cable interview came on the eve of his junior coalition Liberal Democrat party annual autumn conference in Glasgow, where members will debate government policy on a range of matters.

On the issue of the help to buy mortgage scheme - state guarantees for riskier mortgages due to be introduced in January to help first-time buyers - Cable said the government should consider only rolling out the programme in certain parts of Britain.

The Guardian quoted Cable as citing Northern Ireland, parts of the north of England and the Midlands as suitable areas for the scheme, which critics fear could make a housing bubble more likely.

A treasury spokesman said there were no plans to alter the timetable for the introduction of the help to buy mortgage scheme, which will start across the country in January.

(Reporting by Costas Pitas; Editing by Bill Trott)