Cable defends new minimum wage rates
Employment Law & HR update 20/03/2012
The Government has announced that the national minimum wage for
people aged 21 and above will rise by 11p to £6.19 an hour in
October – lower than the current rate of inflation.
Changes to the minimum wage followed the recommendations made by
the Low Pay Commission in October, and also saw the wage for
workers age 18 to 20 remain at £4.98 an hour and for those age 16
to 17 remain at £3.68 an hour.
The cost of living rose by 3.6 per cent in the year to January
2012 according to the latest Consumer Prices Index (CPI). Business
Secretary, Vince Cable, said that the minimum wages were set more
or less in line with the average increase in earnings – which rose
by 1.4 per cent in the same period.
Cable explained that the freezing of the youth rates would help
to stimulate the British economy in the long-run by making it more
affordable for companies to hire.
“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,” he explained.
The decision to peg the rates for younger workers has been
criticised by union leaders, who have said that when compared to
the rate of inflation, it essentially means that they are taking a
TUC chairman, Brendan Barber, said, “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. […] There is now a
real danger that young people will view minimum wage work as
Business groups have, however, criticised the rise in the adult
rate, stating that it would feed the inflation of wages at higher
Commenting on the announcement, Nick Soret, of
Mentor Employment Law
& HR said:
"Business owners will be relieved that the increase in the
minimum wage is being pegged at less than 2% this year, with
increases for most of those aged under 21 frozen”.
“This is in line with government policy to "improve the labour
market position of young people" and to reduce the burdens on
employers to encourage growth”.
“In the longer term, it seems businesses can look forward to
further simplification of the national mimimum
wage structure, while retaining the principle of a minimum
wage as a basic level of protection for workers".
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