Minimum wage set to rise by 15p
Business and unions are divided over the national minimum wage after the Government announced that the adult rate will increase by 15p an hour, benefiting almost a million workers.
Ministers said they had accepted recommendations from the Low Pay Commission, taking the adult rate to £6.08 an hour in October, while the statutory minimum for 18 to 20-year-olds will increase by 6p to £4.98 an hour. The rate for 16 to 17-year-olds will rise by 4p to £3.68 an hour, while for apprentices it will go up by 10p to £2.60 an hour.
The adult increase is worth 2.5%, below the rate of inflation, while the new figure of £6.08 compares with the first ever national minimum wage of £3.60 an hour for adults and £3 for younger workers when they were introduced in 1999.
Business Secretary Vince Cable said: "More than 890,000 of Britain's lowest-paid workers will gain from these changes. They are appropriate, reflecting the current economic uncertainty while at the same time protecting the UK's lowest-paid workers."
The announcement was made shortly after Mr Cable addressed the annual conference of the British Chambers of Commerce (BCC), making no mention of the increase during his speech.
David Frost, director general of the BCC, said it is the "wrong increase, at the wrong time", adding: "With over a million unemployed, the priority has to be getting people back into the job market. Youth unemployment is at a record high and we can't afford to price young people out of work. These changes will be a barrier to job creation, and ultimately economic recovery."
Stephen Robertson, director general of the British Retail Consortium, said: "At a time when the priority should be getting more people into work, any increase in staff costs is an extra hurdle. This rise is at the very top end of what retailers could be expected to live with."
TUC general secretary Brendan Barber described the increased as "modest", saying: "With research suggesting that workers on the minimum wage spend 100% of their pay rises where they live or work, these increases should provide a modest stimulus to local economies. There will be room for much more generous increases in future years, once the economy begins to recover."
Unite general secretary Len McCluskey said: "This small increase in the minimum wage is completely outstripped by the current rate of inflation. The rise will do little to help the lowest-paid in our society keep up with the rising cost of food and fuel," while Unison said the rise in the adult rate was "totally outstripped" by the increasing cost of basic living, while the 10p rise in the apprentice rate would not be enough to help young people, hit hard by the recession.
Neil Bentley, CBI deputy director general, said: "This moderate increase strikes the right balance during a period of economic uncertainty. It means that workers on the minimum wage will not fall behind the rest of the workforce in terms of pay rises. A larger rise would have hit businesses hard and could have put many lower-paid jobs on the line."