NEWS

Brexit 'To Cut 10p Off Increase In National Living Wage'

'This Tory Brexit government are creating Breadline Britain by hitting the poorest hardest.'

12/10/2016 09:48

The impact of leaving the European Union is likely to hit increases in the national living wage next year, a report has warned.

Weak pay growth is set to cut 10p off the figure, with the rate now expected to increase to £7.50 an hour, said the Resolution Foundation.

The current rate is £7.20 for adults, and the think-tank said the expected 30p-an-hour increase will still deliver annual rises of up to £600 for more than four million workers.

The foundation has forecast that by 2020 the living wage will reach £8.20 - lower than previously estimated.

The report said the living wage is set to “transform” earnings, helping 800,000 workers out of low pay by 2020.

Gareth Fuller/PA Wire
Tim Farron has criticised the Government over revelations Brexit is likely to hit increases in the national living wage

Conor D’Arcy, policy analyst at the Resolution Foundation, said: “While there is much uncertainty over Britain’s long-term economic outlook, most economists agree that wage growth in the next few years is likely to be weaker than expected prior to the referendum.

“That means we’re unlikely to see the £9 national living wage that George Osborne talked about in this parliament.

“As we approach the Autumn Statement we’ll soon learn what the NLW will be next year. An increase to around £7.50 will deliver a welcome annual pay rise of up to £600 for full-time staff.

“Though that’s less than the £800 raise previously forecast, it’s sensible that the size of the rise adjusts in line with wages of typical workers. This flexibility means that calls from some businesses to scale back the NLW even further are wide of the mark.

“With over four million workers set to be earning the new legal minimum by 2020, ministers need to work closely with employers to ensure that they’re not just able to pay the legal minimum, but can offer staff a route out of low pay altogether.”

A Business Department spokesman said: “The Government is committed to building an economy that works for all and the national living wage is doing just that, with more than one million workers already benefiting from a pay rise.

“The independent Low Pay Commission is chiefly responsible for making recommendations for national minimum wage rates.”

Liberal Democrat leader Tim Farron said: “This Tory Brexit government are creating Breadline Britain by hitting the poorest hardest.

“Brexit was supposed to be about taking back control when actually it seems it is just taking out of the pockets of the people who can least afford it.

“The Liberal Democrats are the real opposition to this Tory Brexit government.”

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