TUC – below-inflation minimum wage rise won’t “lift the pressure” on hard-pressed families

• Minimum wage is going up less than inflation and far lower than food prices, union body says
• End of energy support scheme will “wipe out” half of minimum wage increase
• Average energy bill will be worth 13% of the minimum wage – up from 7% two years ago
• Cost of living crisis “far from over”, TUC warns

This weekend’s increase in the minimum wage won’t “lift the pressure” on hard- pressed families, the TUC has warned today (Friday).

The TUC highlighted that the minimum wage will rise below inflation and far lower than soaring food prices.

Analysis by the union body shows that minimum wage workers will miss out on £124 this year as a result of the new rate not rising in line with CPI inflation.

And this loss increases to £712 if the RPI measure of inflation (which takes into account housing costs) is used.

The TUC also highlighted that the minimum wage will go up (+9.7%) at just half the rate of current food prices (+18.3%).

Had the minimum wage risen in line with grocery bills, low-paid workers would have pocketed an extra £1500 over the next year.

End of energy bills support scheme

The end of the government’s energy bills support scheme will also “wipe out” a significant chunk of the increase in the minimum wage, says the TUC.

People will spend an additional £67 a month on energy bills from April – around half the monthly rise in the minimum wage for a full-time worker.

Cost of living crisis set to continue

The union body says that even if inflation drops in the months ahead, many low-income families will continue to struggle with the cost of living.

The TUC estimates that average energy bills this Spring (£2,500) will be worth 13% of the average minimum wage workers’ salary – compared to 7% in April 2021.

And with food inflation at its highest in nearly half a century, budgets will be squeezed even further.

Higher minimum wage needed

The TUC says the government must be far bolder in ending the scourge of poverty pay.

The union body says ministers should:

⁃ increase the minimum wage should be increased to £15 an hour as soon as possible.

⁃ work with unions and employers in the private sector on sector-wide Fair Pay Agreements to improve pay and working conditions

⁃ ban zero-hours contracts to help stop the spread of low-paid insecure work

TUC General Secretary Paul Nowak said:

“Everyone who works for a living deserves to earn a decent living

“But tomorrow’s below-inflation increase to the minimum wage is not going to lift the pressure on hard-pressed families.

“A large chunk is going to be wiped out by soaring energy bills. And with food prices shooting through the roof, many low-paid workers will not see a positive difference in their spending power.

“It’s time to put an end to low-pay Britain. That means getting the minimum wage to £15 per an hour as soon as possible.

“And it means introducing industry-wide Fair Pay Agreements so that all workers have a minimum set of pay and rights - starting with social care and the ferries sector.”

Commenting on the ongoing cost of living crisis, Paul Nowak added:

“Inflation may fall over the next year. But make no mistake - the cost of living nightmare is far from over.

“Millions are still living wage packet to wage packet.

“Unless we bring bills under control – and get pay rising in every corner of the country – families will keep lurching from crisis to crisis.”

ENDS

Notes to editors:

• Minimum wage analysis based on latest ONS CPI, RPI and CPI Food inflation in February 2023, comparing prices to the same month the previous year.
• Analysis based on a full-time worker doing 35 hours at the minimum wage. Gross wages are used without taxes or benefits considered.
• The government’s energy support scheme provided a £400 discount to energy bills from October 2022 to March 2022, equating to £67 a month.

*Based on £2500 Energy Price Guarantee