Increasing the minimum wage to £10 an hour for everyone over the age of 18 would provide a £5.6bn boost for Britain’s economy, according to new research commissioned by the Unite union.
Unite says 9 million workers have suffered “the longest squeeze in incomes since the Napoleonic era”. But increasing both the national living wage and national minimum wage to £10 per hour would boost household incomes by an average £1,300 per year, whilst also providing a boost for the nation’s coffers.
Unite claim the economy would benefit through increased tax receipts, national insurance contributions and lower spending on in-work benefits.
The research conducted by Landman Economics shows workers in the hospitality and retail sectors would be the ‘biggest winners’, benefiting 5.2 million female workers and more than three-quarters of younger workers who are ineligible for the new national living wage.
An “intermediate” increase to £9 per hour for workers aged 25 and over, £8.70 for workers aged 21-24 and £8 per hour for workers aged 18-20 would benefit around 6.25 million workers, the research says.
Commenting on the report’s findings, Unite assistant general secretary Steve Turner said: “Workers’ wallets are running on empty and incomes are being squeezed by cuts to in-work benefits and the government’s chaotic introduction of Universal Credit.
“There is something desperately wrong with our economy when 60 per cent of people in poverty are living in working households and over one million food parcels are handed out each year.
“As in-work poverty grows, big business is benefitting from corporate welfare which is subsidising low pay across the economy in the form of in-work benefits.
“Increasing the minimum wage and national living wage to £10 per hour would be a huge boost for young workers and help end poverty pay rates that hospitality workers have to endure.
“It would be a virtuous circle helping ease the squeeze on incomes, while increasing the public finances through greater tax revenues and reduced spending on in-work benefits.
“A £10 per hour minimum wage would mean extra money in people’s pockets which would be spent in communities and on high streets across the UK.
“It would help breathe life into a flagging economy and make work pay.”
The report looked at the potential economic impact of an immediate increase from the current rate of £7.83 per hour for workers aged 25 and over, £7.38 per hour for workers aged 21-24 and £5.90 per hour for workers aged 18-20, to £10 per hour for all workers aged 18 and over.