Britain's plan to raise minimum wage backed by review

LONDON (Reuters) – Britain’s plan to raise the minimum wage to two-thirds of median earnings, taking it to 10.50 pounds ($13.58) an hour, was endorsed by an independent review on Monday that found setting a floor on pay had a negligible effect on job creation.

Companies are now likely to see wage costs rise after next month’s snap national election whatever the outcome.

Conservative Finance Minister Sajid Javid said in September he would increase the National Living Wage (NLW) to the new target by 2024, provided economic conditions allowed, and expand its reach to all workers over the age of 21, down from 25 now.

The opposition Labour Party said it would raise the minimum wage to 10 pounds ($12.93) an hour immediately if it wins power.

An independent review commissioned by the government from economics professor Arindrajit Dube of the University of Massachusetts Amherst examined the impact of minimum wages in Germany, the United States, Britain and other countries.

“Based on the overall evidence – with a special emphasis on the recent, high quality, evaluations of the NLW and other more ambitious policies internationally – my report concludes that there is room for exploring a higher NLW in the UK up to two-thirds of the median wage,” he said. “It will also be important to empirically evaluate and recalibrate any such ambitious policy based on new evidence down the road.”

Javid said, “The evidence is clear that our approach is the right one.” 

But Labour said Javid’s pledge “was an insult to our hard working people”.

“It’s a derisory offer which people will have to wait years for,” Labour’s finance spokesman John McDonnell said. “Labour will immediately introduce a real living wage of 10 pounds an hour for everyone 16 and over, outstripping every publicity stunt figure the Tories invent.”

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