Here’s the biggest problem with the living wage

More people are set to be on it than ever before

Is it acceptable for the government to control a fifth of wages of over-25s in the private sector? That’s what is set to happen by 2020 – with many hairdressers, carers and office workers experiencing being on the minimum wage for the first time.

It’s all down to the new minimum wage – or what George Osborne is calling the living wage – which will affect “particularly marginal people, in marginal areas and marginal businesses”, according to David Norgrove, the chairman of the Low Pay Commission (LPC).

The LPC is tasked with alerting the government when there are problems with pay in the UK. The commission said small companies will be burdened much more than larger ones as they employ 52% of minimum wage workers in the country.

“It’s the corner shops who are already under pressure from the Sainsbury’s that’s just opened down the road, it’s the hairdressers, it’s the care homes . . . the individual pubs and clubs and restaurants,” Norgrove told the FT.

Under new government plans, the minimum wage for over-25s will be one of the highest in the OECD by 2020 - rising to 60% of median earnings.

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Readers' comments (2)

  • Anonymous

    Minimum wage would not need to be so high if rent/transport etc was cheaper.

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  • Anonymous

    business can cash in on high rent/transport by allowing some staff to live in office.

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