David Cameron promised and David Cameron delivered. Last year, the British Prime Minister told his people that “Britain deserves a pay raise.” And indeed, on Friday, more than a million British workers were given an increase in their pay as a higher minimum wage came into force.
The British Chancellor of the Exchequer George Osborne announced a “National Living Wage,” where those aged 25 and over will see their minimum pay jump from £6.70 ($9.63) to £7.20 ($10.30) an hour. The inflation-adjusted minimum wage has gradually been increasing in the last five years with the latest increase giving the UK a boost in annual minimum wage compared to its OECD counterparts.
NOT ALL BRITS ARE HAPPY WITH THE WAGE INCREASE AS IT DOES NOT BENEFIT ALL WAGE EARNERS EQUALLY
Friday’s increase is the “biggest change” since its introduction in 1999 and is considered an economic experiment that is a result of the tight political debate on whether the country should leave the European Union.
13% Increase by 2020
Last year, Osborne announced a series of increases in the wage that will make it 13 percent higher than it would otherwise have been by 2020 in hopes that the change will boost productivity and create working conditions that are more rewarding than welfare payments.
A lack of productivity growth has held back the economy of late despite the jobless rate falling to a decade-low of 5.1 percent. As a result of the higher minimum wage, businesses in the typically low-paying hospitality, retail and social care sectors have already announced that said they might have to cut staff in response to the wage increase.
And they are not the only ones. In fact, seventy percent of economists polled predicted businesses will be forced to cut jobs as a result of the pay hike but 72 percent said the bump will boost productivity and increase economic growth as firms invest in technology instead and workers put in more effort.
