Member Article

Minimum wage will increase

The national minimum wage will rise to £6.31 for adults and £5.03 for 18-to-20-year olds from October, the Government has announced.

Following recommendations of the Low Pay Commission, the changes represent below current inflation level rises.

The Government chose to reject a recommendation to freeze apprentices’ pay, which will increase by 3p to £2.68.

Katja Hall, CBI Chief Policy Director, said: “Pay restraint has been crucial in creating jobs in this tough economic climate.

“The LPC has struck a careful balance in setting the rates given sluggish growth, particularly in recommending a cautious approach to youth pay.

“The LPC will need to monitor the impact of raising the adult rate very carefully. Given average earnings this year are already lower than expected, we must make sure the minimum wage doesn’t limit jobs in key sectors, by outstripping pay across the rest of the workforce.

“The law is clear that employers must pay apprentices the legal minimum wage. It is right that ministers tighten up compliance and enforcement.”

Tim Thomas, head of employment policy at manufacturer’s association EEF, said: “Today’s announcement on the National Minimum Wage strikes a delicate balance between the need for an element of pay progression and the limitations employers face in accommodating pay rises.

“The modest increase in the Apprenticeship rate is unlikely to negatively affect apprenticeship recruitment and of much greater importance is the raising of apprenticeships standards, better information and advice to students and ensuring that apprenticeships are truly employer-led and employer-driven.”

TUC General Secretary, Frances O’Grady, said a boost to incomes of low paid workers would go “straight into the economy” and urged employers that can afford it to implement a living wage for their staff.

Head of policy at the Forum of Private Busines, Alex Jackman, said: “In the current business climate any additional cost is an unwelcome one. However, we appreciate that for the second year running the Government has implemented an increase in the National Minimum Wage that is below inflation, and for this restraint employers will no doubt be thankful.

“Many of our members pay above the National Minimum Wage but we are in difficult economic times and the government has recognised that any increase in NMW has a wage inflation rate higher up the scale.

“To put the wage rise in context, at the Budget the Government announced an Employment Allowance to save all employers £2000 on their staffing costs, to be implemented from April 2014. As the increase in National Minimum Wage comes into effect this October, today’s increase will mean a business employing 9 or more full time members of staff on the minimum wage will see over half of that wiped out before it even comes in.

“Given this impact, the country categorically cannot afford the misleadingly titled ‘living wage’ in its current predicament.”

This was posted in Bdaily's Members' News section by Tom Keighley .