Minimum wage to increase

The Government says the national minimum wage will increase by 12p an hour to £6.31 for adults and by 5p to £5.03 for 18-to-20-year-olds.

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Minimum wage increases remain below rate of inflation

The rises to minimum wages announced today are still below the rate of inflation.

This means that someone earning the new rate will still be making less money in real terms because the prices of goods and services are rising more quickly.

The minimum wage increases are as follows:

  • Adult minimum wage - 1.9% increase
  • 18-20-year-old minimum wage - 1% increase
  • 16-17-year-old minimum wage - 1.1% increase
  • Apprentice minimum wage - 1.1% increase

And the current rate of inflation is:

  • Consumer Prices Index (CPI) - 2.8% per year
  • Retail Prices Index (RPI) - 3.2% per year

Minimum wage rise 'to hit margins' of small business

The increase in the national minimum wage is unwelcome in today's economic climate. We understand the Government must strike a balance between boosting consumer spending and economic growth, however they must ensure the UK's small businesses stay competitive at a time when the economy remains fragile.

There will be businesses that operate on thin margins, who will struggle with any increase to the minimum wage. We therefore urge Government to place renewed impetus into driving down their overheads, such as business rates, energy and fuel costs, and freeing up cash-flow by ending the scourge of late payment by big companies to their suppliers.

– Mike Cherry, Federation of Small Businesses

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Employers should consider 'going beyond' minimum wage

The new rates for minimum wage compare to the so-called Living Wage of £7.45 (outside London) and £8.55 in the capital. The Living Wage is worked out according to the basic cost of living in the UK, but employers only pay it on a voluntary basis.

The Living Wage Foundation welcomes the work of the Low Pay Commission, which has a difficult task in setting a rate. It is very important to have a statutory floor and ensure nobody sinks below that level.

But we think it's also important to have something more ambitious than a minimum - which is where the Living Wage comes in. The Living Wage is a voluntary rate of pay which employers commit to paying.

It's for employers who decide they can do better and go further than the statutory minimum.

– Rhys Moore, Ddirector of the Living Wage Foundation

Union calls for £1 rise in the minimum wage

Unite General Secretary Len McCluskey says the 12p rise in the minimum wage for adults is not enough, and wants it to go up by £1-an-hour.

An increase of £1-an-hour would have the twin-pronged effect of putting money into the wallets and purses of the lowest paid in the UK. They would then have a small extra incentive to spend in the countrys high streets, already on its knees because of the flatlining economy.

Such a £1 uplift is a more sensible way to help people off benefits - and much more humane than what the government is currently doing with its savage welfare cuts. In the long-term, increasing the national minimum wage could save the country billions. The 12p increase announced is derisory - and does nothing to help those already struggling with soaring household bills.

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Minimum wage increase 'strikes the right balance'

Tim Thomas of the manufacturers' organisation the EEF said the announcement struck a balance between the need for pay progression and the limitations employers face accommodating pay rises.

Apprentices at a learning and career development centre Credit: Press Association

Tim Thomas said:

"The modest increase in the apprenticeship rate is unlikely to negatively affect apprenticeship recruitment and of much greater importance is the raising of apprenticeships standards, better information to students and ensuring that apprenticeships are truly employer-led and employer-driven."

Ministers reject advice over apprentice rate

Ministers say they have rejected a recommendation from the Low Pay Commission that the rate for apprentices should be frozen. Business Secretary Vince Cable said:

We are accepting its recommendations for the adult and youth rate increases... 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.

Higher wages will 'help economic recovery'

Boosting the incomes of the low paid goes straight into the economy and wage-led growth must be part of the recovery so we would have liked to have seen minimum wage rates go up further today, even if the government has rightly rejected calls for a freeze.

We will continue to press ministers to ensure the minimum wage is properly enforced particularly for apprentices where there is considerable evidence that many miss out.

And we will continue to urge the many employers who can afford it to implement a full living wage for their staff.

– Frances O’Grady, TUC General Secretary
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