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U.K. Considers Cutting Minimum Wage to Boost Jobs

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April 2 (Bloomberg) -- The U.K. government is considering cutting or freezing the national minimum wage if it’s shown to be damaging the labor market, Prime Minister David Cameron’s spokesman said.

The Daily Telegraph newspaper reported today that the Business Department has changed the remit of the Low Pay Commission, which sets the level of the wage, to include consideration of its impact on the “economy and employment.” A cut in the wage might encourage employers to take on more workers as the economy climbs out of recession.

It’s up to the Low Pay Commission to report back to ministers before any decision on cutting the minimum wage is taken, the spokesman, Christian Cubitt, said today. For workers over 21, the rate is 6.19 pounds ($9.37) an hour.

“It’s something we are looking at,” Cubitt told reporters in London. “We need to make sure that it’s working.”

“Working people are already worse off under this government because prices are rising faster than wages,” the opposition Labour Party’s junior treasury spokesman, Chris Leslie, said in an e-mail. “And on top of that figures from the independent Institute for Fiscal Studies show that the average family will be 891 pounds worse off this year because of tax and benefit changes since 2010.”

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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