LONDON, Oct. 19 (Xinhua) -- The British government is committed to tackling low pay through a National Living Wage, a minister from Department of Business, Energy and Industrial Strategy has said in London.
Margot James, the minister for small business, consumers and corporate responsibility in the newly-created Department of Business, Energy and Industrial Strategy, said Tuesday in a speech to mark the launch of a report into low pay from economic think tank The Resolution Foundation, that the government was "fully committed to increasing wages for the lowest paid".
James said that the previous coalition government between 2010 and 2015 had introduced a National Minimum Wage to protect the pay levels of low-paid workers.
She said that earlier this month the main hourly rate, now applicable to 21 to 24 year olds, had increased to 6.95 pounds (about 8.55 U.S. dollars), putting it at its highest ever level in real terms.
James said that new policies had been developed: "As our economy recovered and GDP increased, we needed to make sure that the lowest paid in society received their fair share of this economic growth."
"So we introduced the new National Living Wage into law. Now, a full-time low-paid worker aged 25 and over earns around 900 pounds more this year than they did last year," said James.
"It's a more forward-looking policy than its predecessor and is part of our long term strategy to tackle low pay," added James.
The government's aim is to reach nine pounds an hour as the minimum wage by 2020, although this figure has not yet been turned into a target.
The actual minimum wage is calculated as 60 percent of the median wage for adult workers, and will vary depending on the growth in the economy between now and 2020.
Conor D'Arcy, policy analyst at the Resolution Foundation and co-author of the report published "Low Pay Britain 2016", told Xinhua that various economic projections showed the ambition to reach nine pounds an hour might not be feasible.
On the back of lower growth expectations around Brexit the economy may not grow as fast, he said.
"Instead of being 9 pounds the National Living Wage is on target for being 8.60 pounds, still moving the UK's wage floor into new territory. As a percentage of what the typical person is earning it is going to be a lot higher than in the past," said the expert.
However expectations for rising inflation, which jumped Wednesday from 0.6 percent to 1 percent meant that "the pound in your pocket will be worth that bit less if inflation is faster and we do not see nominal wage growth pick up to compensate." said D'Arcy.
But D'Arcy did not think higher inflation and lower growth expectations would drastically shift the number of people that are low paid and he made a case for flexibility in the wage target.
"If it was just sticking to the 9 pounds figure that has been discussed that could see the greater risk of businesses having a tough time with this policy and implementing it," said D'Arcy.
He added: "The sensible approach of adapting it to how the median wage is growing should mean that it is affordable for employers and should shield low paid employees from the negative impacts that we might see from Brexit."
James indicated that government policy would aim to protect low paid workers: "We continue to think about their future. We have asked the expert Low Pay Commission to increase the Living Wage to 60 percent of median earnings by 2020 subject to sustained economic growth."
She said this would mean over 2.5 million low wage workers are now expected to benefit directly from the National Living Wage by 2020, and more could see their pay rise too.
Britain, despite being the sixth largest global economy on some measures, does not compare well with its 19 other peers in the Organization for Economic Cooperation and Development (OECD), whose data shows Britain with 20 percent of workers in low pay, putting it in the lower half of the OECD members. (1 pound = 1.23 U.S. dollars)
