National Minimum Wage changes
The Government has accepted the Low Pay Commission’s
recommendations on the next increase to the National Minimum Wage,
due on 1st October.
The headline figure the adult rate of NMW will increase by the
figure for “average Earnings growth” within the whole UK economy,
of 2.6%. The new adult rate will be £6.08 per hour. This is higher
than the figure anticipated for annual economic growth of 1.7%, but
lower than CPI inflation of 2.9%.
The Low Pay Commission admits that its membership was divided,
with employers’ representatives urging caution in the current
economic climate and workers’ representatives wanting low-paid
workers to have particular protection when inflation is rising so
sharply. The end result is a clear compromise between the two
views.
Young workers to get a smaller increase, but no
exception for interns
The rates for young workers have only increased by around 1.2%
because the Commission found “some evidence to suggest (the
employment prospects of) young people may have been adversely
affected by the minimum wage”. The rate for 18-20 year olds
increases to £4.98 and for 16-17 year olds to £3.68.
However, the Commission made it clear that it would be
conducting further research on the matter, and that if it turns out
that the NMW has not affected their employment prospects, the rate
will increase in future years to restore their relative
position.
The Commission was also asked to look at Internships, in
relation to “the labour market position of young people”.
Internships are currently often unlawfully unpaid, but the
Commission did not recommend any relaxation of NMW laws for
interns; recommending instead that the NMW should be more strictly
enforced.
No help for SMEs, but squeeze on care providers
recognised
Although the Commission’s terms of reference included looking
“particularly at the competitiveness of small firms”, the
Commission did not recommend any different treatment, or separate
NMW rates, for employees of small businesses.
But, in response to a regular concern expressed by care
providers that commissioning bodies do not take into account rising
labour costs when awarding contracts, the Commission strongly
recommended that local authorities and the NHS should take into
account the costs of wages, including increases in the NMW, when
purchasing social care.