Cable backs minimum wage rise
Vince Cable today cited Keynesian economics as he backed a 1.9% rise in the minimum wage to £6.31.
In an address to the High Pay Centre, the Business Secretary noted that falling wages had been accompanied by a rise in employment, "which is what classical economics would predict".
But he added: "There is a counter view, basically Keynesianism, that cuts in real wages depress consumption and demand and thereby cause unemployment."
Mr Cable said he supported the Low Pay Commission's recommendation this year for the minimum wage, currently £6.19, to rise 1.9%, "in line with earnings and more than out of work benefits".
He added: "We are also accepting the Commission’s recommendation of a 1% increase for young workers, recognising the higher unemployment rates amongst young people."
But Labour said the Government should go further and consider bringing in a 'living wage'.
Shadow Minister for Employment Relations, Consumer & Postal Affairs Ian Murray MP said: "All the key Low Pay Commission recommendations have been accepted, despite recent suggestions ministers were seeking to undermine the minimum wage.
"However, the Government needs to do more to enforce the minimum wage... Ed Miliband has also been leading calls for a living wage and Labour will continue to press ministers to back the campaign and promote the living wage."