Ministers called to ignore pleas to stop wage rises post Brexit

The government should not put a limit on living wage rises despite business organisations lobbying to do so in the post-Brexit environment, according to a think tank.

A total of 21 trade associations wrote to new business secretary Greg Clark asking him to “exercise caution” on the rate at which the living wage might rise because of “economic uncertainties the country faces” after the Brexit vote, the BBC reported.

The living wage was set to £7.20 per hour in April this year, which has benefitted over 1m staff aged 25 and over.

Think tank Resolution Foundation said that women, young and older workers were most likely to lose out if these are limited.

Policy analyst at the foundation Conor D’arcy said despite businesses being unhappy with the higher minimum wage, the rate was pegged to a typical hourly pay and reflects changing economic circumstances.

Based on the Treasury’s economic forecasts the think tank expects the national living wage to rise to around £8.70 by 2020, which it has previously estimated should benefit more than 6m workers. This figure is likely to fluctuate in coming years as wage forecasts are updated and the impact of Brexit becomes clear.

In the four years leading up to that, low paid workers are due to get above average pay rises as the policy approaches its target of paying 60% of average hourly pay. If the pay rises are cut, the low paid workers would lose as much as £10,500 from their annual pay, according to the foundation.

This expected wage is lower than the £9 forecast mentioned in the March 2016 budget as overall wage growth is expected to weaken.

Most workers are expected to benefit directly from the wage rises but some will also benefit from a “ripple effect” as wages are pushed up more generally with the new policy.

A spokeswoman for Prime Minister Theresa May said: "The prime minister has been clear about building an economy that works for everyone, and making sure that people earn a decent wage for a day's work is an important part of that."

The Low Pay Commission will meet in October to decide its recommendation for next year’s national living wage increase.