Empty pocketThe national minimum wage will be lower than it was in 2004 after inflation is taken into account - even after it increases later this year, according to a new report.

The Resolution Foundation think tank said October's 11p an hour rise to £6.19 was the third successive below-inflation increase.

The report, written by Professor Alan Manning of the London School of Economics, said that while recent caution on increases was justified, the impact of the minimum wage had now "stalled".

The value of the statutory rate had "flatlined" to just over 50% of median earnings, compared with 60% in other countries including France.

James Plunkett, senior analyst at the Resolution Foundation, said: "After 13 years of detailed studies into its impact, the benefits of the national minimum wage are now beyond doubt.

"It has boosted wages for some of the poorest paid people in the country and helped to make sure work pays, without causing job losses. The question now is what role it can play in the future to raise living standards even further."

Professor Manning said: "The minimum wage is one of the most popular policies of modern times but in some sense it's been a victim of its own success.

"Given the scale of the challenge now facing living standards, it might be time to think about more radical options for reform.

"For example, we could consider introducing a higher minimum wage for workers aged over 30 who are more likely to have families to support, or for London and the South East."

A Business Department spokesman said: "It is important that we have a national minimum wage that provides the necessary protection for the lowest paid workers while at the same time not pricing people out of the labour market. The rates are recommended to Government each year by the independent Low Pay Commission who base their analysis on extensive evidence and a thorough consultation process."

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