Row looms over pounds 3.60 low pay limit

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A MINIMUM wage of pounds 3.60 an hour was recommended by the Low Pay Commission yesterday in a report that will infuriate the unions but please employers.

The report was delivered as Tony Blair issued a call for pay restraint and urged Britain to "put its shoulder to the wheel'' for greater economic success.

The figure was widely expected but is less than many unions wanted and could cause ructions at the Labour Party annual conference in October.

Mr Blair said last night at the Confederation of British Industry annual dinner that a minimum wage and the minimum standards laid down last week in the "Fairness at Work" White Paper allowing recognition of unions were "entirely consistent with a dynamic and efficient economy provided they are sensibly implemented".

The TUC proposed a minimum of pounds 4 per hour and Rodney Bickerstaffe, general secretary of Unison, Britain's largest trade union, said he would carry on campaigning for pounds 4.61 an hour - half the median male earnings - which was once Labour Party policy and which he said would help around 5 million workers.

"Surely at the end of the 20th century to sweat someone in a rich nation like ours for as little as pounds 3.60 an hour does not do credit to a people committed to fairness and social justice.

"I will continue to campaign to get the level raised. I hope it doesn't take as long to get a decent level as it took to get the minimum wage established in the first place," said Mr Bickerstaffe.

But Sir Colin Marshall, president of the Confederation of British Industry and chairman of British Airways, said pounds 3.60 an hour would be "acceptable".

A rate of about pounds 3.20 is possible for those between 18 and 21; below 18 the minimum will not apply.

The Cabinet is expected to agree the final figure for the minimum wage and the exclusions from its scope before the summer. The unions will argue that exclusions should only apply to those young people who are engaged in training programmes.

A minimum wage of pounds 3.60 would affect more than 1.5 million workers, mainly women, employed in low-paid jobs such as shop workers, hotel staff, security workers and care workers.

In a speech to the CBI on the twin themes of pay restraint and success through hard work, Mr Blair told his audience of senior businessmen that the growth in private sector earnings gave "serious cause for concern".

"It would be the worst of short-termism now to pay ourselves more today at the cost of higher interest rates, fewer jobs and slower growth tomorrow. This must apply to private and public sector alike. It really is up to us: the greater the responsibility, the bigger the reward," he said.

The country had learnt the lesson of pay restraint so often in the past. "We cannot afford to learn it again.'' It was the easiest thing to promise to spend more money "but nothing will ever push me into breaking the firm economic rules we have applied".

The country, he added, needed "to raise our game'' to close the productivity gap with other countries. He went on: "This is the challenge for all of us - taking responsibility to improve our country's performance, tackling the gap in our performance by doing something ourselves to close it.

"The British spirit has always been able to rise to challenges, and we must rise to this one. We must do more than match the performance of the best. We must be the best."

The speech coincided with an interview in which the Prime Minister disclosed one of his secrets for success in life: struggle is good for you.

Mr Blair tells Eva magazine he was worried life was too easy for his three children, Euan, Nicky and Kathryn. "You've got to be able to make your own way, your own life and I think to do well in life you need a little bit of struggle."

The Prime Minister confirmed that the Blairs claimed child benefit like everyone else. "Everyone gets it. It's up to you what you spend it on, but I do think most people spend it on their kids."

But there was a sting in the tail. The Prime Minister pointed out that those on the higher tax rate of 40 per cent could see child benefit taxed in future.

Blair tough on public spending, page 10