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Small Business News - 26th February 2008

National Minimum Wage to Cut Child Poverty?

Ex-minister links Minimum Wage with child poverty.

According to the Press Association, David Blunkett, the ex Work & Pension Secretary, has called for the National Minimum Wage to be "increased significantly" if there is to be any cut in the levels of child poverty.

Mr Blunkett believes that a steady rise in the Minimum Wage to 50% of the average wage levels will be enough to meet government targets of halving child poverty by 2010.

On the contrary, last year the Confederation of Business Industry (CBI) called for only a modest rise in the National Minimum Wage, urging the Low Pay Commission and other bodies to consider the fact that the National Minimum Wage had risen by 53% since it introduction in 1999 whereas average earnings had increased by just 38% over the same period.

The UK's minimum wage is the third highest in the world behind France and Australia yet Mr Blunkett believes it still needs to be increased to 50% of the average level so that it falls in line with countries as variable as Ireland, Luxembourg, Bulgaria and Malta across the EU.

At the launch of the Save The Children book on child poverty, Mr Blunkett said:

“As a strong advocate of the Government's Welfare to Work agenda, and of making work pay, I believe that the Low Pay Commission and the Government need to be much more ambitious in raising the national minimum wage and subsequent adjustments to tax credits.

“As well as being a contribution to moving the able-bodied from benefit into work, this would reduce in-work poverty and the feeling of unfairness when comparable industrial and service-sector earnings are taken into account.

“We should therefore aim for steady progress to 50% of the comparable wage levels, in line with countries as variable as Ireland, Luxembourg, Bulgaria and Malta across the EU.”

For further business advice on the subject see our business advice article on Minimum Wage & Statutory Pay Obligations.