Government announces 20p rise in national minimum wage

money saving tips for londonersThe government has announced that from October this year, the national minimum wage will go up to £6.70 per hour. This a rise of 20p per hour. The change will benefit in excess of 1.4 million workers in the UK.

Younger workers will also see an increase in their hourly rate. The statutory minimum for those workers in the 18 to 20 age bracket will go up 3% from October, to £5.30 per hour and by 2% for those in the 16 to 17 age bracket to £3.87. Apprentices will now be paid £3.30 per hour, an increase of 20%. This rate applies to apprentices aged between 16 and 18 and also those who are aged 19 plus and in their first apprenticeship year. All other apprentices will receive the national minimum wage applicable to their age group.

The Low Pay Commission – the independent group set up to advise the government – advocated a rise in payment rates. However, in the case of apprentices, the government has decided to increase the hourly rate by 50p more than the 7p per hour hike recommended by the LPC.

The 3% growth in the national minimum wage (for adults) is the most significant real-term rise in nearly a decade.

Labour has pledged to raise the minimum wage to £8 an hour during the course of the next parliament, should it win the general election in May.

John Cridland, The Director of the CBI (Confederation of British Industry), has commented that while the fact that the government accepted the advice regarding youth and adult rates is positive, there are concerns that the far higher increase of the apprenticeship rate could be seen as overtly political.

In a similar vein, the Institute of Economic Affairs have observed that they believe the Low Pay Commission is drifting from its remit and is being exploited as a ‘vehicle to reduce inequality.’

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