Responding to today’s announcement on the proposed new rate for the National Minimum Wage, Chris Goulden, Head of Poverty at the Joseph Rowntree Foundation (JRF), said:
“The National Minimum Wage (NMW) falls well short of the amount people need to cover costs and achieve an adequate standard of living in the UK.
“With in-work poverty on the rise, a small increase in the rate above inflation is a welcome step to easing the strain on households budgets. But we believe bolder action is needed to address low pay and the cost of essentials, such as housing, energy and food.
“Raising pay at the bottom could help just over half of households in working poverty. The danger is this increase could be clawed back by the Treasury through lower tax credits, undermining the beneficial impact of the NMW increase and turning the extra pound into pennies in the worker’s pocket.
“Our research shows that the cost of a minimum living standard has increased by a quarter since 2008 – thanks to rising costs and cuts or freezes to tax credits and other in-work benefits. This means the pressure to raise wages has become even greater.
“A minimum wage that prevents workers from making ends meet is bad for them, for the economy and for society. Addressing low pay is an important first step in reducing the UK’s in-work poverty problem, though this must only be part of a much-needed comprehensive strategy against poverty.”