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The BBC's Stephen Evans
"In areas like the North East and Wales, one in 12 will get a pay rise"
 real 56k

Monday, 5 March, 2001, 16:25 GMT
Minimum wage up 10%
waiter in hotel
Opulent surroundings, but often hospitality staff are poorly paid
The minimum wage for UK workers is set to rise by 10%, following a recommendation by the Low Pay Commission.

The changes were announced to Parliament by Trade and Industry Secretary Stephen Byers.

"The minimum wage has been a success, with 1.5m benefiting without any negative consequences for business," Mr Byers said, quoting from the report.

"The best form of welfare is having a job..the national minimum wage is a key part of making work pay," he added.

UK hourly wages
Minimum wage: 4.10 (from Oct)
Average men: 10.89
Average women: 8.38
Average part-time: 6.83
Average manual: 7.19
source: New Earnings Survey, April 2000
The move would boost the minimum wage to 4.10 from 3.70 an hour from 1 October - and to 4.20 from October 2002, economic conditions permitting.

That compares to an average wage of 10.28 in the UK for people in full-time employment.

The Low Pay Commission will make recommendations on the youth rate of 3.20 later in the year.

Mr Byers said that the minimum wage has had "the greatest beneficial effect" on women's pay since the Equal Pay Act 30 years ago and had also helped close the gap in regional pay differences.

The Low Pay Commission advises the government on the national minimum wage and has been weighing evidence from both industry and unions.

Warning on jobs

The Confederation of British Industry (CBI) had warned that "a figure in excess of 4 an hour could be extremely damaging to business with some pain below this".

But CBI spokesman John Cridland, a spokesman said that "the advantages will outweigh any downside" at the level agreed.

Trade Union leaders had called for the minimum wage to be set as high as 5 an hour.

For the Conservatives, Shadow spokesman David Heathcoat-Amory accepted the principle of the increase, but expressed concern that the private care sector would be hard-hit by the decision. He also said that the government had increased the burden of taxation on the poorest households.

For the Liberal Democrats, Trade and Industry spokesman Vincent Cable welcomed the changes, especially for those in the South-west.

But he asked whether 100m that would be saved by the Treasury in reduced payments under the Working Families Tax Credit would be recycled to poor families in the Budget.

Inflationary fears

Small businesses fear that inflation will kick in if there are significant rises in the minimum wage.

Some affected sectors
Social care
Source: CBI
And they have also warned that such rises could lead to job losses or bankruptcies.

Trade Unions had been calling for "well over 4 and in the range of 4.50 to 5.00," a spokeswoman for the TUC told BBC News Online.

However, John Monks, the TUC General Secretary, said that the increase was "clearly another significant step towards a decent minimum wage."

The Low Pay Commission was first due to deliver its recommendations in July, but this date has been brought forward to allow industry more time to implement the change.

International comparisons

The minimum wage was first introduced in the UK in April 1999, following a commitment in the Labour Manifesto during the General Election.

It has been uprated once before, in October, from 3.60 to 3.70 - although there is no commitment to an annual review, something that the trade unions would like to introduce.

The UK's level of the minimum wage is broadly in line with that in most other major industrial countries. In the United States the minimum wage recently increased from $5.15 to $6.15 per hour (4), while in France it is around 4.10 per hour.

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See also:

29 Dec 00 | Business
Employers urged to close pay gap
14 Feb 01 | Business
UK unemployment tumbles
13 Nov 00 | Business
Pay settlements rising
20 Dec 00 | Business
CBI warns on minimum wage
29 Nov 00 | Northern Ireland
NI workers 'not getting' minimum wage
30 Sep 00 | Business
Minimum wage to increase
08 Sep 00 | Business
Minimum wage fight
31 May 00 | UK Politics
Minimum wage rise for young
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