UK Government Pushes to Raise Hourly Minimum Wage to 9.5 Pounds

Rishi Sunak, UK Chancellor of the Exchequer
Photo by Reuters Yonhap News

[Asia Economy Reporter Park Byung-hee] The UK government plans to raise the minimum wage starting from April next year, when the next fiscal year begins. In Germany, where a new government is about to be launched, raising the minimum wage is also expected to be adopted as a key policy task of the new coalition government.

After the spread of COVID-19 last year, analyses have repeatedly pointed out that income inequality has worsened. As a result, many governments are raising the minimum wage as part of support for low-income groups to prevent the widening gap between rich and poor.

Bloomberg reported on the 25th (local time) that the UK government proposed raising the hourly minimum wage for workers aged 23 and over from ?8.91 (14,336 KRW) to ?9.50, a 6.6% increase, in the next fiscal year. The minimum wage for workers aged 21-22 will also rise from ?8.36 to ?9.18, an increase of 9.18%, and the minimum wage for apprentices will increase from ?4.30 to ?4.81.

The minimum wage increase plan was reflected in the government budget for the next fiscal year (April 2022 to March 2023). Chancellor of the Exchequer Rishi Sunak stated in a press release, "Raising the minimum wage ensures fair compensation for labor," and added, "The government will continue efforts to break the low-wage structure before this parliamentary session ends."

The proposed minimum wage increase rate of 6.6% is more than double the UK’s consumer price inflation rate of 3.1% in September.

The opposition Labour Party criticized the minimum wage increase as insufficient. Labour MP Bridget Phillipson said, "It is a completely uninspiring increase," pointing out that "the rise in taxes and energy costs, along with cuts to Universal Credit, will offset the effects of the minimum wage increase."

The newly formed German coalition government is also expected to prioritize raising the minimum wage. This is because raising the minimum wage was a key pledge of Olaf Scholz, the Social Democratic Party (SPD) candidate who secured the largest number of seats in last month’s general election. Scholz proposed raising the hourly minimum wage to €12 (about 16,277 KRW) as an election pledge.

U.S. President Joe Biden also made raising the hourly minimum wage to $15 (17,537 KRW) one of his key campaign promises in the last presidential election. After taking office, Biden introduced a series of large-scale economic stimulus packages, which faced strong opposition from the Republican Party. For now, President Biden has put the minimum wage increase plan on hold. However, since addressing income inequality is one of Biden’s core national policy tasks, it is expected that he will push for the minimum wage increase again if necessary.