Adult minimum wage rate to rise

 

The adult rate of the minimum wage is to rise by 11p to £6.19 an hour from October, Business Secretary Vince Cable announced today.

But the rates for younger workers will be frozen at £4.98 for 18 to 20-year-olds and £3.68 for 16 to 17-year-olds. Apprentices will enjoy a 5p increase in their minimum wage to £2.65 an hour.

The changes are in line with the recommendations of the independent Low Pay Commission and come into effect on October 1.

Mr Cable said: "I believe that the recommendations of the Low Pay Commission strike the right balance between pay and jobs, and have therefore accepted all the rate recommendations. The Low Pay Commission has done a good job in difficult circumstances.

"In these tough times freezing the youth rates has been a very hard decision - but raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run."

LPC chair David Norgrove - who was today reappointed for a second four-year term - said: "We welcome the Government's acceptance of our recommendations on the rates for the National Minimum Wage.

"The Commission was again unanimous, despite all the economic uncertainties and the different pressures on low-paid workers and businesses. We believe we have struck the right balance between the needs of these workers and the challenges faced by employers."

The minimum wage was introduced by Labour in 1999 at £3.60 an hour for adults, and is revised each year on the basis of recommendations from the Low Pay Commission.

This year's 11p hike for workers aged 21 and over amounts to a 1.8% rise - around half of CPI inflation, which stood at 3.6% in the most recent figures.

It increases the annual pay for a full-time worker on 40 hours a week on minimum wage by £228.80 to £12,875.

Asked what the justification was for the freeze on rates for younger workers, Prime Minister David Cameron's official spokesman said: "We are accepting the LPC recommendations. I think the judgment that has been made is one about youth employment rates.

"Raising youth rates wouldn't benefit young people if it meant that it was more difficult for them to find a job."

Unison union general secretary Dave Prentis said today's announcement was "bitterly disappointing and will condemn millions of families to life on the breadline".

Mr Prentis added: "While the Chancellor looks set to cut income tax for the very richest, those at the bottom of the pay pile do not have enough to live on.

"An extra 11p an hour is simply not enough. Millions of workers need a living wage of £8 an hour to cope with rising prices and keep them out of poverty.

"And what message are we sending to our young people when the rates for those under 21 are frozen? They deserve a fair day's pay for a fair day's work, and should not be left vulnerable to exploitation.

"Of course it is taxpayers who lose out too, as they will have to pick up the in-work benefits bill because of Scrooge employers."

Paul Kenny, general secretary of the GMB union, said: "The proposed increase in the national minimum wage is below the rate of inflation and will lead to a drop in living standards for the lowest-paid workers in our economy. It is a missed opportunity to put purchasing power into the hands of those who will boost consumption.

"Freezing pay for young workers, many of whom work in the profitable retail sector, is a further kick in the teeth from the Government that increased tuition fees to £9,000."

John Longworth, director-general of the British Chambers of Commerce (BCC), said: "We are disappointed that the Government has chosen to raise the adult national minimum wage rate by 1.8% - far above our recommendation.

"While the pressures of inflation are hurting many people, especially the lowest paid, this decision adds significantly to the cost of doing business, and feeds wage inflation at higher levels.

"In his Budget on Wednesday, the Chancellor should offset the hike in the national minimum wage by scrapping the huge business rate rise which will affect many businesses from April. This rate rise will stop many from employing more people, whether on minimum wage or above."

Mr Longworth added: "We are pleased that ministers have heeded our call to freeze the youth and development wage rates. Freezing these rates will ensure employers are not put off from employing young people, and give them more confidence to invest in their training."

TUC general secretary Brendan Barber said: "The LPC should have been bolder in its recommendations. Even in the current economic climate there was room for an increase in the minimum wage that at the very least kept pace with inflation and earnings.

"It is wrong to deny young people an increase this year, as there is no evidence that the minimum wage has had an adverse impact on jobs. The reason why firms have not been hiring enough new workers is because they lack confidence in this Government's ability to set the UK on course for a sound economic recovery. There is now a real danger that young people will view minimum wage work as exploitative.

"Many of the businesses that are calling for the minimum wage to be frozen are also complaining about the lack of consumer spending. Boosting demand is vital - but this will not be achieved by squeezing the low-paid even further.

"Low-paid workers, like hairdressers, shop workers and care assistants, tend to spend 100% of any salary increase in their local economy, so a well-judged rise in the minimum wage would have a beneficial effect across the UK."

John Walker, national chairman of the Federation of Small Businesses, said: "We support the Low Pay Commission's underlying thinking that the priority must be to ensure young workers get employment and that the rates for these workers should remain unchanged until the economy picks up.

"However, we would have supported a larger increase in the apprentices rate, both in recognition of the value apprenticeships can have for firms and to encourage more young workers to enter into these schemes."

TUC general secretary Brendan Barber said: "The LPC should have been bolder in its recommendations. Even in the current economic climate there was room for an increase in the minimumwage that at the very least kept pace with inflation and earnings.

"It is wrong to deny young people an increase this year, as there is no evidence that the minimum wage has had an adverse impact on jobs. The reason why firms have not been hiring enough new workers is because they lack confidence in this Government's ability to set the UK on course for a sound economic recovery. There is now a real danger that young people will view minimum wage work as exploitative.

"Many of the businesses that are calling for the minimum wage to be frozen are also complaining about the lack of consumer spending. Boosting demand is vital - but this will not be achieved by squeezing the low-paid even further.

"Low-paid workers, like hairdressers, shop workers and care assistants, tend to spend 100% of any salary increase in their local economy, so a well-judged rise in the minimum wage would have a beneficial effect across the UK."

Alison Garnham, chief executive of Child Poverty Action Group, said: "This is another turn of the screw on families working hard in the lowest-paid jobs.

"When 58% of children who live in poverty have at least one working parent, low pay is clearly at the heart of the UK's child poverty problem.

"But from April, there will also be a further series of cuts to tax credits, which will hit many of the same families.

"With earnings falling behind inflation, the Chancellor's priority at the Budget must be to protect families struggling to make ends meet in poverty-pay jobs by postponing tax credit cuts until the universal credit comes in."

CBI policy director Katja Hall said: "Businesses will welcome the approach taken to this year's National Minimum Wage rates.

"The moderate rise in the adult rate and the freeze in the youth rates will come as a relief to the many hard-pressed firms right across the country.

"Retailers, care homes, hospitality, and other consumer-facing businesses are experiencing particularly tough conditions, so it's good that the LPC listened to the CBI's advice and made sure its recommendations preserve jobs and support the fragile recovery.

"The LPC also listened to businesses on the youth rates. With youth unemployment at its highest level for a generation, we must take great care not to price young people out of a job.

"Freezing the minimum wage will help reduce one of the barriers to employers deciding whether or not to take on a young person."

The YMCA questioned the freeze in the rate for young people.

Chief executive Ian Green said: "Many young people who have found themselves work have every right to feel pretty aggrieved by today's announcement.

"It seems illogical to argue that certain groups are entitled to an increase in the minimum wage whilst others are not and it is difficult to accept this inconsistency.

"The Government has made much of its belief that people in work should be better off than those who are not and should be supported, but today's announcement seems to go against this.

"Young people in work are facing the same rises in prices, such as fares on public transport, as the rest of the working population yet there is to be no mitigation of this as a result of this freeze."

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
News
i100
Arts and Entertainment
The Plaza Theatre in Atlanta, Georgia was one of the 300 US cinemas screening
filmTim Walker settles down to watch the controversial gross-out satire
Sport
Alexis Sanchez missed a penalty before scoring the opening goal with a header at the back post
footballArsenal vs QPR match report
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
news
News
i100
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
News
i100
Sport
Rooney celebrates with striker-partner Radamel Falcao after the pair combine to put United ahead
footballManchester United vs Newcastle match report
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Senior Marketing Executive- City of London, Old Street

£40000 - £43000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

Ashdown Group: Marketing Manager

£40000 - £43000 per annum + benefits: Ashdown Group: An international organisa...

Ashdown Group: Internal Recruiter -Rugby, Warwickshire

£25000 - £30000 per annum: Ashdown Group: Internal Recruiter -Rugby, Warwicksh...

Ashdown Group: Marketing Manager/Marketing Controller (Financial Services)

£70000 - £75000 per annum + benefits: Ashdown Group: Marketing Manager/Marketi...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all