Living wage won’t hit £9 an hour, warns Resolution Foundation think tank
I have frequently wondered whether the living wage was (whilst no doubt desirable) sustainable in a number of rural and for that matter urban settings. This article tells us: The warnings come from the Resolution Foundation think tank, which has urged Theresa May that “backsliding” on the living wage (NLW) will be costly for millions of low-paid workers. Watering down the popular policy would also fly in the face of the new Prime Minister’s pledge, on the steps of Number 10, that helping struggling families will be a key aim of her government.
Conor D’Arcy, the Foundation’s policy analyst, said: “Understandably some businesses are unhappy about a higher minimum wage, particularly amid the post-referendum uncertainty. But backsliding on the Government commitment is unnecessary, given the in-built flexibility of the policy to adjust to changing economic circumstances. It would also be costly for millions of low-paid workers, so the Prime Minister should stick to her guns.”
When then-Chancellor George Osborne unveiled the NLW, in July last year, he said he was making a “promise” that it would reach £9 an hour at the end of the decade.
The commitment lessened criticism that the higher floor – although a big boost to the existing minimum wage – was far less than voluntary rate set by campaigners, in line with the true cost of living.
That hourly rate is already £9.40 in London and £8.25 in the rest of the country – and will be uprated again next month.
But the Resolution Foundation said its analysis, based on the latest independent economic forecasts, showed the NLW is currently on track to rise to only around £8.70 in 2020.
The reason is predictions of weaker wage growth, although the Foundation said the projected figure for 2020 is likely to rise and fall as wage forecasts are updated and the impact of implementing Brexit becomes clear.