From the TUC

Minimum Wage frozen for young people

19 Mar 2012, by in Working Life

The Government has today announced its response to the Low Pay Commision’s (LPC) recommendations for the National Minimum Wage rates to apply from October 2012 onwards*. There will be an increase of 11 pence for adults (1.8 per cent) and 5 pence on the apprentice rate (1.9 per cent), but the two youth rates will be frozen for 2012/2013. 

With average pay settlements running at around 3 per cent and RPI inflation at 3.9 per cent, we believe that there was room for the LPC to do more this year. We are obviously very concerned about youth employment, but the LPC has been able to find no evidence that the NMW has played any part in this. I certainly do not believe that we could somehow price young people into work by lowering wages. Rather, it seems most likely that employers would simply pocket any savings. Furthermore, UK businesses are facing lack of demand at the moment, and squeezing wages will simply make this situation worse.

TUC General Secretary 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. The reason why firms have not been hiring enough new workers is because they lack confidence in this government’s ability to set the UK on course for a sound economic recovery. There is now a real danger that young people will view minimum wage work as exploitative.

 “We welcome the LPC’s modest increase for apprentices and its rejection of calls to freeze the adult rate. Many of the business representatives that called for the minimum wage to be frozen are also complaining about the lack of consumer spending. Boosting demand is vital – but this will not be achieved by squeezing the low paid even further.

“Low-paid workers, like hairdressers, shop workers and care assistants, tend to spend 100 per cent of any salary increase in local shops and businesses so, as well as providing some relief to hard pressed families, a well-judged rise in the minimum wage helps stimulate demand across the UK economy.”

NMW rates from October 2012:

Current rate

Oct 2012

Per cent increase (%)

Adults aged 21 and above

£6.08

£6.19

1.8

18–2O-year-olds

£4.98

£4.98

0

16 and 17-year-olds

£3.68

£3.68

0

Apprentices under the age of 19 and older apprentices in the first year of apprenticeship (other apprentices are eligible for the relevant age-based rate of the NMW)

£2.60

£2.65

1.9

The LPC predicts that the increases will benefit 938,000 people in October of which 61 per cent will be women**. The range of coverage is impressive but the depth of the pay increase could have been a fair bit more.

We shall have to fight hard for low paid people to catch up next year, as they are falling behind.

PS – The minimum wage is enforced by HM Revenue and Customs. Phone the Pay and Work Rights Helpline on 0800 917 2368.

* http://nds.coi.gov.uk/content/Detail.aspx?ReleaseID=423769&NewsAreaID=2

**Low Pay Commission Report 2012, p150.