Unions demand higher minimum wage

Unions claim some low-paid workers are falling through the net

Unions have called for the minimum wage to rise to up to £5 an hour.

The UK's first national minimum wage was launched in 1999 amid much controversy.

In February this year, the government announced a 10p rise to £3.70 as fears about its negative effects on the economy proved to be groundless.

The unions' call for a bigger increase has met with an angry response from employers, who claim it could damage the economy.

The increase is set to come into force on 1 October.

But more is needed to prevent 1.5 million low-paid workers falling into the "poverty trap", the Trades Union Congress urged on Thursday.

Rising wages

"The minimum wage was introduced at a deliberately cautious level. Now, it is clear, despite employer warnings, that the impact on jobs is negligible, the minimum wage should be uprated to a more realistic level," TUC general secretary John Monks said.

The minimum wage was designed to improve the salaries of an estimated 20 million low-paid workers by an average 30%.

Independent evidence supports the assertion that the minimum wage has not damaged the economy.

It has not caused job losses or upset industry pay structures, pay specialists Incomes Data Services (IDS) said earlier this year.

Cautious approach

But the Confederation of British Industry says it is too early to increase it.

"Now is not the time to throw caution to the wind," said Susan Anderson, the CBI's director of human resource policy.

"So far, we have been prudent and successfully introduced the minimum wage without a significant negative impact. Let's not blow it now," she said.

The TUC has also called for an end to the payment of a lower rate to younger workers.

They argue that the adult minimum wage should be paid to everyone aged over 18.

But the CBI says this would prove to be an "own goal", claiming there is plenty of international evidence that show jobs would be lost.