National Minimum Wage

Andrew Selous (South West Bedfordshire) (Con)
11.  What his policy is on the future level of the national minimum wage.

The Secretary of State for Business, Innovation and Skills (Vince Cable)
Our aim is to maximise the wages of the low-paid without it costing jobs and ensure the benefits of the recovery are shared by everyone. We fully support an independent Low Pay Commission and are currently considering this year’s recommendation to increase the national minimum wage by 3% to £6.50. This would represent the first real increase since the financial crisis. In addition, we are considering the Low Pay Commission’s response to how we can restore the real value of the national minimum wage, which has not kept pace with inflation since 2008.

Andrew Selous
I am looking forward to many of my constituents seeing a pay rise shortly as the minimum wage rises, but what is the Secretary of State doing to address the worrying productivity gap so that future wage rises are based on increases in productivity and earned output?

Vince Cable
My hon. Friend is right that if we are to sustain real increases in wages whether at the minimum level or above, there have to be productivity increases and many of the problems in the low-paid sectors like catering and care are to do with the fact that productivity levels are very low. I gather, for example, that in some of the lowest paid sectors the minimum wage is already 90% of the median. That reflects the low productivity in those industries.

Nic Dakin (Scunthorpe) (Lab)
21.   With families £1,600 a year worse off, has the Secretary  of State got any plans to follow Labour’s lead and incentivise employers to pay the living wage?

Vince Cable
We have already made it clear that we would encourage companies to pay the living wage if they could afford it, but we need to be very clear that this is not a mandated system. Indeed, the Low Pay Commission has expressed considerable care in its recommendations to be sure that in promoting a higher level of wages at the bottom, which we want to see, we do not force large numbers of workers out of work.