This morning, as you listened to the Today Programme (oh alright, as you read Metro over someone's shoulder on the train), you may have come across news that George Osborne is planning to increase the minimum wage above the level of inflation. 'Hurrah!' You/me/everyone (probably) thought 'I'm finally getting that pay rise!' Then you remembered that you're not actually sure what the minimum wage is, or, indeed if it affects you now quite as much as it did when you were doing your A Levels and working Saturdays in that weird orthopedic shoe shop in town. No? Anyone? Just me? OK, moving on...
So who will an increase in the minimum raise affect? The short answer, according to Sacha Romanovich, Board Member at business advisers, Grant Thornton, is: it depends. 'The current minimum wage is £6.31 an hour, which works out to be about £11,000 a year. If this is what you’re earning at the moment, then your wage would increase to £7 an hour. If you’re working 37.5 hours a week, then you’ll receive an extra £70-£80 a month, and around an extra £1000 a year.
'It won't affect everyone. There are more women than men on the minimum wage (in 2010, one in five women were on the minimum wage, compared to one in ten men) as roles such as shelf stacking, cleaning, or work in the hospitality trade unfortunately tend to attract a disproportionate amount of women.'
But as far away as payday might seem right now, if you're a graduate it's unlikely you'll be getting a pay rise out of it – simply because you probably earn too much already. 'If you’re lucky enough to be on a graduate-training scheme or are in your first job post university, you’ll probably be unaffected by the increase. Believe it or not, the average starting salary for a graduate in London is around £20,000, so it’s unlikely you’ll be on the sort of wage bracket that will fall into minimum wage territory.'
It's employers who will bear the brunt of the increase – which might have unintented consequences for you if you're a first jobber. According to Sacha, 'The size of the business you work for will also impact on how you’re affected. In times of recession, smaller businesses, particularly service industries with high employment costs will find the proposed minimum wage increase a huge strain. The unintended consequence is that they might not be able to employ as many people, so if you’re in a minimum wage role, or on a zero hours contract for this type of business, then there’s a small possibility that the minimum wage could affect you negatively.
'But it’s worth remembering that even with the proposed increase, the minimum wage only goes so far. It still falls far short of the living wage of £8.80 an hour in London. The Living Wage is a campaign calling for employers to pay their staff a minimum wage that allows them to work their way out of poverty. It's calculated on the basic cost of living in the UK, and is designed to prevent workers in the UK falling into the poverty trap. So, even if you benefit from the increase in the minimum wage, you’ll still be earning less than the cost of living in the UK.'
This article originally appeared on The Debrief.