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Minimum wage hike could be coming to Britain

Britain's opposition Labour party will pledge to raise the statutory minimum wage if it wins the next election, as the wages of economies' lowest paid workers make headlines worldwide.

Labour party leader Ed Milliband will announce plans to increase the minimum wage over the course of the next parliament by linking it to the U.K's average earnings.

Ed Miliband.
Oli Scarff | Getty Images
Ed Miliband.

The minimum wage in Britain is currently £6.31 ($10.62) an hour, and is due to rise to £6.50 in October. It is set by the Low Pay Commission, an independent government body.

Labour has not revealed what it would raise the minimum wage to, saying the exact amount would be announced closer to the next general election in May 2015.

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"A Labour government will establish a clear link between the level of the minimum wage and the scale of wages paid to other workers in our economy" Milliband is due to say in a speech later Monday. The average annual salary inBritain is currently £26,500 ($44,572), according to the Office of National Statistics.

"We will say workers on minimum wage must never be left behind because those who work hard to create our nation's wealth should share in it," Milliband added.

But businesses have concerns about a minimum wage hike, fearing it could drive up costs, cut into profits and ultimately hurt their ability to compete internationally.

"The national minimum wage has been a success in raising wages for the lowest paid because it's been left to the Low Pay Commission, not politicians, to set the rate," Katja Hall, chief policy director of the CBI (Confederation of British Industry) lobby group, said in a statement.

"A government proposed target would undermine the Commission's independence."

Simon Walker, director general of the Institute of Directors, agreed, adding that setting a target linked to average earnings "risks seeming a little simplistic."

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International interest

Labour's pledge comes as minimum wages continue to attract attention in a number of countries worldwide.

In the U.S., President Barack Obama is trying to raise the federal minimum wage from $7.25 an hour.

But a minimum wage bill, which aimed to gradually increase the federal minimum wage to $10.10 an hour over 30 months, failed to clear a key legislative hurdle in the senate in April.

Meanwhile in Switzerland, voters this weekend rejected a proposed statutory minimum wage of 22 Swiss Francs ($25 US dollars) per hour. Commentators said the proposal came amid increased attention on income inequality in one of Europe's wealthiest countries.

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