Today it was announced that the minimum wage would increase by 1.9% from £6.19 per hour to £6.31 from October 2013. However with the headline inflation rate at 3.2%, this is real terms cut in living standards. In reality, as our previous post shows, the personal inflation rate of the poorest households is likely to be higher than the headline rate.
Someone working full-time (37 hours per week) on the minimum wage will be receiving £11,909.56 per year. That will rise by £230 next year (or £4.40 a week) as a result of today's real terms cut.
So what would have happened if the minimum wage had simply kept pace with the rate of inflation (RPI)? This would of course mean no real terms increase in living standards for the poorest, no improvement, no raising of the baseline, just treading water.
The table below shows what would have happened if from October 2008 the minimum wage had increased in line with RPI inflation:
At a time when corporations and the super-rich have just received tax breaks, yet another real terms cut in the minimum wage is an insult to millions of low paid workers - who have lost thousands of pounds due to consecutive real terms cuts.