Government approve new national minimum wage rate


Minimum WageThe National Minimum Wage is set to rise from October, following acceptance by the government of a recommendation by the Low Pay Commission (LPC).

All levels of the minimum wage will rise, including those for an apprentice, which the government has said will increase despite calls from the LPC for the rate to be frozen.

National Minimum Wage rises

From 1st October 2013 the minimum wage will rise as follows:

  • The adult rate will increase by 12p to £6.31 an hour
  • The rate for 18-20 year olds will increase by 5p to £5.03 an hour
  • The rate for 16-17 year olds will increase by 4p to £3.72 an hour
  • The apprentice rate will increase by 3p to £2.68 an hour

Responding to the increase, Business Secretary, Vince Cable, said: “The independent Low Pay Commission plays a crucial role in advising the government when setting the national minimum wage every year. It balances wages of low paid workers against employment prospects if the rate was set too high.”

Cable continued: “We are accepting its recommendations for the adult and youth rate increases, which I am confident strikes this balance. However, there is worrying evidence that a significant number of employers are not paying apprentices the relevant minimum wage rate.”

“Apprenticeships are at the heart of our goal to support a stronger economy, and so it is important to continue to make them attractive to young people. Therefore, I am not taking forward the LPC’s recommendation to freeze the apprenticeship rate due to non-compliance, but instead am raising it in line with the youth rates.

“We are working on a series of tough new measures to ensure we tackle non-compliance issues across the board.”

The government has confirmed it will be working closely with employers, training centres and apprentices alike, as it aims to improve awareness of rights and responsibilities on pay, as well as ensuring compliance with the new rates.

The increases are below the current levels of inflation, which mean the minimum wage will rise more slowly than prices, causing potential financial difficulties for the most low paid.

Mixed reaction

Whilst experts welcomed the news of the increase, many are still concerned about the non-compliance of some firms, who continue to avoid paying the minimum wage.

Reaction from employers was mixed, with the EEF manufacturer’s organisation broadly welcoming the change, whilst the British Chambers of Commerce (BCC) expressed concern that the rises would put further pressure on business.

Dr Adam Marshall, the BCC’s Director of Policy, said: “We are disappointed that the government has chosen to raise the adult national minimum wage rate by 1.9%, an increase that is over 50% higher than current average pay growth.”

Marshall continued: “While the pressures of inflation are affecting many people, including the lowest-paid, the scale of this rise adds significantly to business costs, most of all by contributing to broader pay inflation. It will also make some employers less inclined to hire additional members of staff.”

Experts believe that the rates will continue to make returning to work more inviting, although the changes are only on a small level, many are still believing this will help reduce the unemployment rate further.