Minimum Wage Rises 
The Government announced yesterday (April 15th) that the national minimum wage will rise by 12p per hour to £6.31 for adults and by 5p an hour for 18 to 20-year-olds from October, after recommendations from the Low Pay Commission.

There will also be a rise in the rate for apprentices of 3p per hour to £2.68, despite the Commission’s recommendation that the rate be frozen. All the increases are below current inflation levels.

Speaking at the Institute of Directors yesterday, Business Secretary Vince Cable said that the lower rise in the rate for young people was “recognising the higher unemployment rates amongst young people”.

He added that it is important that both the apprenticeship rate and the youth rates kept pace with increases in benefits, which are going to rise by 1 per cent.

Dr Cable also said that there will be a crackdown on “abuses of the minimum wage” in industry, pointing to the cash economy of some employers, such as restaurateurs, who make assumptions about tips or deduct essentials such as uniforms from an employee’s wage.

However, reaction to the news from business groups has been mixed. The EEF manufacturer’s organisation said the apprentice wage rise was unlikely to negatively impact on apprenticeships, while the TUC praised the extra helping hand for those on the lowest wage and said that the rise sends a positive signal about the importance of apprenticeships.

The British Chambers of Commerce (BCC), however, said that the adult rate increase, which is more than 50 per cent higher than current average pay growth, would add even further to the strain on small businesses and the rise could make some employers less inclined to hire additional members of staff.

The BCC was happier with the increase in youth and apprenticeship rates however, as they said it would ensure that employers still have an incentive to take on young people.

For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk




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