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Think tank urges caution on further minimum wage increases

Low-paid workers could be priced out of the job market when another recession hits if the UK does not slow down its increases to the minimum wage, a think tank has warned.

The Resolution Foundation said that future rises should be done more cautiously, despite applauding the work to improve the minimum wage since 2015.

Increases to the minimum wage have not halted improvements in employment rates, but Reuters reports the Resolution Foundation as saying that this is based on economic progress that may only be temporary.

“The minimum wage is at a crossroads,” the Resolution Foundation says. “Policymakers seeking to combine ambition with caution might wish to aim for a still fast – but slightly slower rate – of increase than recently seen.”

The Resolution Foundation echoes calls made by the Labour Party in recent years that rises should still continue, and that a rate of a around £10 an hour would help alleviate low paid work.

This would mean that jobs paying less than two thirds of the median hourly wage could be removed.

“Such an ambitious move would transform the labour market,” Reuters quotes Resolution Foundation analyst Nye Cominetti as saying.

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  1. Andrew Cartlidge 30th May 2019 at 6:08 pm

    It suits employers of low skilled workers to pay the minimum or national ‘living’ wage and to have their workers’ incomes topped up by the state in the form of tax credits and other benefits. Such businesses therefore have their labour costs subsidised by other taxpayers – this system acting as a catalyst for the recruitment of lowly paid unskilled labour from overseas. These distortions are one of the real causes of apparently stagnant UK productivity – and the danger that UK will develop as a low skilled/low wage economy. Businesses should be made to bear the true cost of valued labour which means paying workers at least the minimum and non-official ‘Real Living Wage’ which is presently £9.00 per hour outside London and more within. A 40 hour working week needs at the very least to sustain a basic standard of living – without a top-up from benefits.

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