NATIONAL MINIMUM WAGE
Government approves new £5.93 minimum wage rate
The government has published its response to the recommendations in the Low Pay Commission's 2010 report. There will be an increase in the adult rate of the national minimum wage from £5.80 to £5.93 in October 2010, a rise of 2.2%.
Other recommendations:
There will be a new minimum wage of £2.50 per hour for apprentices who are either under 19 or in the first year of their apprenticeship.
The development rate (which will cover workers aged 18-20 years) increases from £4.83 to £4.92.
The rate for 16-17 year olds rises from £3.57 to £3.64.
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Some reactions
Trades Union Congress
www.tuc.org.uk
TUC General Secretary Brendan Barber said: “This is a relatively modest increase which the evidence shows employers can afford. We are pleased to see confirmation that the age of eligibility for the adult rate of the minimum wage will fall from 22 to 21 from October this year. This will be a significant benefit for the 40,000 21 year olds in minimum wage jobs.
“It is also good news that the apprentices who are currently exempt from the minimum wage will now be brought into the minimum wage framework with a new apprentice rate. Most apprenticeships deliver high quality training and pay decent rates. But a minority of low quality, low pay employers have crept into the sector. In fact, more than one in ten (11.4%) of apprentices are currently paid less than the proposed rate of £2.50 an hour. Although the new minimum rate is a modest one it will end the worst cases of exploitation.”
Chartered Institute of Personnel and Development
www.cipd.co.uk
Charles Cotton, Performance and Reward Adviser at the CIPD, said: “The LPC is a generally sensible body but this year's recommended hike in the NMW looks to have thrown caution to the wind, especially with regard to the youth and new apprenticeship rate.
“It is difficult to see how this increase will help create jobs or offer a boost in training places for unemployed young people. In particular, combining a higher minimum wage with the impending hike in employers' national insurance contributions really would represent a hefty 'tax on jobs'. Pricing young people out of work, while also using taxpayers’ money to subsidise a youth jobs guarantee, doesn't make sense. We’d have hoped for a more joined up approach.
“In our most recent quarterly Labour Market Outlook survey, a high proportion of our members lacked the certainty on economic prospects for the rest of the year to make decisions about their next pay award. It isn’t clear to us what information the LPC have that gives them greater certainty and confidence. As such we fear they’re jeopardising the jobs recovery with these increases, which will also create upwards pressure on wages above the minimum wage – further exacerbating the impact on jobs.”
John Cridland, Deputy Director-General, CBI, said: “This moderate increase recognises that many businesses are struggling, and helps protect jobs at a time of rising unemployment. The inflation-busting rise some unions had called for would have hit firms hard and put many lower paid workers on the dole."
Want to know more?
Department for Business Innovation and Skills: You can download details of the announcement of the latest hike in the minimum wage by accessing the BIS web site.
Web: www.berr.gov.uk/Policies/employment-matters/rights/nmw.
Directgov: The government site provides an easy-to-use guide to UK employment law, including minimum wage regulations.
Web: www.directgov.gov.uk.
Low Pay Commission: The LPC was established as a result of the National Minimum Wage Act 1998 to advise the government about the national minimum wage.
Web: www.lowpay.gov.uk.