Labour: we will link minimum pay to earnings

Labour: we will link minimum pay to earnings

Ed Miliband will set out radical plans on Monday to tackle low pay, announcing that a future Labour government would set a statutoryminimum wage target linked to average hourly earnings.

The proposals mark the first time Labour has suggested a long-term link between minimum wage and median earnings, rather than setting the figure in cash terms according to what the economy can afford year on year. Labour would attempt to reach the target over five years, and sees it as analogous to the government setting an inflation target for the Bank of England.

Miliband will not announce the precise figure until before the general election. But a recent Resolution Foundation commission report on the minimum wage, chaired by Professor Sir George Bain, the first chairman of the Low Pay Commission (LPC), recommended a rate at 60% of average earnings as a “reasonable lodestar”.

That would put the UK minimum wage in the top third of developed countries.

In 2013 the minimum wage was set at 54.6% of average earnings, and the suggestion from the chancellor, George Osborne, that the minimum wage could be set at £7 an hour would take the wage to 57% of median earnings.

  • The Guardian, 

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