British finance minister backs minimum wage rise

LONDON (AFP) - British Finance Minister George Osborne said he backed an above-inflation rise in the minimum wage to support the fragile economic recovery.

Conservative Mr Osborne told the BBC on Thursday that "Britain can afford" for the figure to rise from the current of £6.31 to about £7.00 (S$13.1 to S$14.6).

Prime Minister David Cameron backed Mr Osborne's call, which appeared timed to overshadow a speech which opposition Labour leader Ed Miliband was due to give on Friday.

"Because we're fixing the economy, because we're working through our plan, I believe Britain can afford an above-inflation increase in the minimum wage, so we restore its real value for people and we make sure we have a recovery for all and that work always pays," Mr Osborne said. Britain's 12-month inflation slowed to the target rate of 2.0 percent in December.

The Chancellor of the Exchequer said that the exact figure for the new minimum wage had to be set by Britain's low-pay commission, which is due to make a recommendation in February.

But he added: "If for example the minimum wage had kept pace with inflation it would be £7 by 2015-16, £6.31 at the moment, so that's an increase I think we can see."

Mr Cameron said in a statement after Mr Osborne's comments were broadcast: "Because of the difficult decisions we've taken to fix the economy, we believe we can now afford to increase the minimum wage - putting more money in people's pockets and helping them provide for their families."

Britain's biggest trade union body, the TUC, welcomed Mr Osborne's proposal but said the government needed to be "more ambitious". Business leaders urged caution, with the Federation of Small Businesses saying the minimum wage should rise only in line with inflation.

The proposal comes just a week after Osborne warned that the government needed to find an extra £25 billion of cuts after next year's general election.

The Conservative-Liberal Democrat coalition introduced tough austerity measures after it came to office in 2010 to tackle a record deficit inherited from the previous Labour government.

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