NATIONAL MINIMUM WAGE
Minimum wage rises to £5.52 in October 2007
The government has announced that the national minimum wage will rise from £5.35 to £5.52 on 1 October 2007.
Development rate for 18-21 year olds will increase from £4.45 to £4.60.
Development rate for 16-17 year olds will increase from £3.30 to £3.40.
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The Confederation of British Industry welcomed the Government's announcement to increase the minimum wage to £5.52 as a “good decision for the economy”.
John Cridland, CBI Deputy Director-General, said:
"With interest rates and inflation rising this is not the year for unaffordable wage increases. Last week the Chancellor made sensible decisions on public sector pay, today government has applied that same caution to the private sector.
The CBI had called for business to receive some relief this year. The minimum wage increase has exceeded average earnings growth since 2003, causing it to have a disproportionate impact in sectors such as retail and hospitality, and undermining pay and employment policies within many firms.”
The Chartered Institute of Personnel and Development called it a “sensible decision following several years of substantial real and relative hikes in the minimum rate”.
John Philpott, Chief Economist at the CIPD said:
“The common good requires a NMW that ensures low paid workers share in growing prosperity without at the same time threatening the jobs that provide them with a livelihood. The Low Pay Commission has served to strike a fair balance on the ‘low pay or no pay’ spectrum, since 1999 and today’s recommendation is no different. Growth in the NMW has easily outstripped both price and average wage inflation throughout this decade.
With the NMW now starting to bite, especially for younger workers, a period of caution is fully justified if jobs are not to be put at risk. The government is therefore also right to be doubly cautious in not extending the full adult NMW rate to 21 year olds. This will disappoint many, particular 18-21 year olds and 16-17 year olds who will see their hourly pay rise by just 15p and 10p respectively. But if the NMW is to succeed as a long-term policy instrument it must be set at a rate that while improving pay at the bottom of the labour market does not have adverse consequences for jobs, inflation and the wider economy.”
The Trades Union Congress felt that the Low Pay Commission (LPC) could have been “bolder and kept the minimum wage rising faster than pay overall”.
General Secretary Brendan Barber said:
“A key priority in this year's debate has been to press for effective enforcement so that every worker is guaranteed their legal minimum. We are therefore pleased that the LPC has recommended that employers who flout the law should face tougher penalties.
Bosses who fail to pay the minimum wage leave vulnerable workers in poverty and undercut the majority of employers who are happy to obey the law. Everybody stands to gain from making the minimum wage as robust as possible, therefore the government should use the coming year to continue moving their enforcement work up a gear.”
Want to know more?
Department of Trade and Industry: You can download details of the announcement of the latest hike in the minimum wage by accessing the DTI web site. www.dti.gov.uk/employment/pay/national-minimum-wage/index.html
Directgov: The government site provides an easy-to-use guide to UK employment law, including minimum wage regulations. www.direct.gov.uk/en/Employment/Employees/Pay/DG_10027201
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. www.lowpay.gov.uk
Incomes Data Services: Visit the national minimum wage section on the IDS web site for research, analysis and an overview of the legislation. www.incomesdata.co.uk