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News | Published October 01 2019

Sajid Javid announces plans to raise minimum wage in the next five years

The National Living Wage will be raised to £10.50 by 2025 , according to Sajid Javid, chancellor of the exchequer.

The pledge also included a change to the age threshold for eligibility for the National Living Wage from 25 to 21 years old.

The Minimum Wage was introduced by Tony Blair in 1999, having been a central pledge in Labour’s 1997 election campaign.

The move will come in two parts, with the threshold opening to 23-year-olds in 2021, and 21-year-olds three years later.

At the Tory party conference, Javid announced that the policy would "help the next generation of go-getters to get ahead".

At present, the minimum wage for those over the age of 25 is £8.21, with those under 18 receiving a minimum wage of £4.35.

John McDonnell, Labour’s shadow chancellor, referred to the announcement as a "pathetic attempt at catch-up".

Javid pledged that the decision would mark Britain becoming the “first major economy in the world to end low pay altogether".

George Osbourne, former chancellor of the exchequer, introduced the National Living Wage in 2016, however, the figure has been contested by the Living Wage Foundation, who believe the figure should also account for the families of employees.

Critics have questioned the lack of detail with regards to the decision, with specific concern as to how businesses will be expected to shoulder the burden. Furthermore, some have highlighted that this new policy is not dissimilar from current plans. 

Lewis Goodall, Sky’s political correspondent, tweeted that the announced rise would account for an extra 46p a year until 2024.

According to Goodall, the national living wage was due to rise by 46p next year already and so this policy may be more of a continuation than new investment.

However, the crucial element of this policy is the desire to bring the national living wage up to 66 per cent of median earnings and keep it at this rate.

This would mean that any rise in wages would lead to a rise in the national living wage, while also bringing all workers out of the OECD definition of low pay.


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Authored by

Alice Jaspars
Culture Editor
@
October 01 2019

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