Why does the minimum wage in Britain need to constantly increase? (ie why does uprating occur?)?

Question

I am studying the minimum wage for an economics essay and i don't quite understand why the minimum wage needs to be constantly uprated instead of just staying at its original level?

If you can, please list as many factors as possible, and try to link it to economics

thanx :)

Answer 1

For one simple reason: Inflation.

As the value of the money nominally drops over time (at around 1.5% annualy in the western world), you need more many (in nominal terms) to buy the same.

In other words, what you could have bought for a pound in 2007, you now need 1.01 pound to buy the same in 2008.

Accordingly, wages are adjusted every so often to compensate workers for raising inflation.

Answer 2

Inflation dictate these rules, another factor is productivity.

If you will take into account instead of nominal minimal wage real one - then you will see that real minimal wage isn't increasing so sharply. So these changes are only to balance change in general price level.