Britain's new so-called national living
wage is the biggest government
intervention in the UK labour market for
decades since the days of Tony Blair and
New Labour so what is it and why does it
matter here are the three things you
need to know first
it means Britain's lowest paid workers
will receive big pay rises not just this
year but every year between now and 2020
the national living wage is really just
a new minimum wage rate that applies to
everyone aged 25 and over but it will be
higher than the current minimum wage and
it will go up more quickly the
government plans to start it at 7 pounds
20 an hour on April 1st then push it up
faster than average pay so that by 2020
it will be worth 60% of median earnings
that's about 9 pounds an hour by that
point a lot more people will find
themselves on the minimum wage between
2015 and 2020 the number of workers aged
25 and over who are on the minimum wage
will treble from 1 million to 3.3
million the second thing you need to
know is that Britain is not alone
countries all over the world are either
introducing minimum wages or pushing
them up in an attempt to do something
about stagnating living standards
Germany introduced its first ever
minimum wage last year meanwhile some US
cities like Seattle are increasing their
minimums to $15 an hour so how does
Britain compare at the minute our
minimum wages in the middle of the pack
it's not the lowest by any means but
it's nowhere near as high as places like
France and Australia the national living
wage will change that picture by 2020
the UK will have one of the highest
minimum wages in the developed world the
third thing to know is that no one is
entirely sure how this national living
wage will actually work out it all
depends on how employers react to the
fact they have to pay people more
they could just accept that they're
going to make less profit or they could
put up their prices alternatively they
could give workers more training and
time-saving technology so that they're
more productive that would make the
higher pay more affordable the worst
thing would be if they just make do with
fewer workers because they can't afford
to keep employing all of them that could
lead to higher unemployment so far
Britain's experienced with the minimum
wage which it first introduced in 1998
has been good it's increased pay a lot
for people at the bottom of the ladder
without causing any job losses but both
optimists and pessimists agree that the
national living wage is a step into the
unknown
Sarah O'Connor the Financial Times
London