The National Minimum Wage for adults is to rise by 2.5% to £6.08 an hour from 1 October 2011. The increase was recommended by the Low Pay Commission (LPC) and accepted by the Government. The rate for apprentices will rise by 10 pence, by 4 pence for 16-17 year olds and 6 pence for 18-20 year olds. The LPC said that it was taking into account the continued economic uncertainty while protecting the lowest paid workers from falling further behind the average.
Business Secretary Vince Cable said the changes would help more than 890,000 of Britain’s lowest paid workers. Despite calls from some employers’ bodies to freeze the minimum wage, the LPC recommended an increase to the adult rate to make sure that the minimum wage retains its relative position and reflects the fact that both economic growth and inflation have been higher than forecast over the past year.
However, according to Unite general secrtary Len McCluskey, with consumer prices inflation at 4.4% the increase will do little to help low paid workers keep up with rising food and fuel prices as the small increase is completely outstripped by the current rate of inflation. However, the Trade Union Congress stated, ‘although a modest rise it should stimulate local economies where workers spend their wages and there will be room for a higher increase once the economy begins to recover’.
In relation to the youth development rate, The British Chambers of Commerce have said the changes will risk further unemployment for young people when youth unemployment is already at a record high. The changes may cause a barrier to job creation and ultimately economic recovery. However, in reply the LPC added that ‘if new evidence shows that minimum wage has not contributed to the employment difficulties of young people, we will recommend that their relative earnings be restored’.