Update (Sunday 8 May 2011): National minimum wage 2011/2012: How will the 2.5% increase to £6.08 for October 2011 stack up against inflation?
With private sector pay expectations subdued, the 2011/2012 national
minimum wage increase could prop up whole economy pay awards in the
closing months of 2011. But how will it compare with inflation? It was
announced on Thursday 7 April 2011 that the national minimum wage adult
rate will increase to £6.08 per hour for 2011/2012, with effect from 1
October 2011. This represents an increase of 2.5% from the 2010/2011
national minimum wage adult rate, which currently stands at £5.93 per
hour (from 1 October 2010 to 30 September 2011). The 2011/2012 national
minimum wage adult rate (at £6.08 per hour) is therefore set 15p per
hour higher than the 2010/2011 rate. The BBC's Robert Peston commented
via Twitter that the "announced increase in the [national] minimum wage
of 2.5% to 608p is considerably less than current rate of inflation."
Update (Thursday 7 April 2011) >> National minimum wage 2011/2012 announced:
The
national minimum wage adult rate will increase to £6.08 per hour for
2011/2012, with effect from 1 October 2011. This represents an increase
of 2.5% from the 2010/2011 national minimum wage adult rate, which
currently stands at £5.93 per hour (from 1 October 2010 to 30 September
2011). The 2011/2012 national minimum wage adult rate (at £6.08 per
hour) is therefore set 15p per hour higher than the 20102/011 rate.
According to the Department for Business, Innovation and Skills (BIS) the
national minimum wage rates for 2011/2012 will be as follows:
The following rates will come into effect on 1 October 2011:
- The adult rate will increase by 15p to £6.08 an hour;
- The rate for 18-20 year olds will increase by 6p to £4.98 an hour;
- The rate for 16-17 year olds will increase by 4p to £3.68 an hour; and
- The rate for apprentices will increase by 10p to £2.60 an hour.
Business Secretary Vince Cable comments:
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. I would like to thank the LPC for doing a good job in difficult
circumstances.
The
BBC's Robert Peston comments via Twitter:
Today's announced increase in the minimum wage of 2.5% to 608p is considerably less than current rate of inflation.
Previous updates:
National minimum wage: What are the new rates for 2010/2011? and
National minimum wage: Increases for 2010/2011 effective today Full details of the national minimum wage rates for 2010 and 2011, which came into effect from 1 October 2010.
National minimum wage 2011/2012: Freeze or cut rates for younger workers, says BCC
2011 Budget: Can we expect an announcement on the national minimum wage 2011/2012?
Can we expect the national minimum wage rate for 2011/2012 (which will
come into effect from 1 October 2011) to be announced in the 2011 Budget
speech, which Chancellor George Osborne is set to deliver on Wednesday
23 March 2011? The national minimum wage 2011/2012 announcement will be
highly anticipated, as this will represent the first time that the level
of the national minimum wage will have been set under a Conservative
Chancellor since the introduction of the national minimum wage in 1999.
A
policy on enforcement, prosecutions and naming employers who flout national minimum wage law (PDF format, 108.2K) came into effect on 1 January 2011.
The Government has announced the
national minimum wage rate for 2010/2011
(external website). With effect from 1 October 2010, the national
minimum wage adult rate will rise from its current level of £5.80 per
hour to £5.93 per hour, an increase of 2.2%. As previously announced,
the
adult rate of the national minimum wage will be extended to 21 year-old workers from October 2010 (subscription required) (it is currently paid to workers aged 22 and over).
The increase to the national minimum wage adult rate is in line with that recommended by the
Low Pay Commission (LPC) in its 2010 report (PDF format, 3.9MB) (external website). The report states that this increase is "in line with the forecast increase in average earnings."
The LPC report also includes the following recommendations on the
national minimum wage, each of which the Government has also accepted:
The Government has also announced that, with effect from 1 October 2010:
- The national minimum wage "youth development rate" (for workers aged
18 to 20) will rise from £4.83 per hour to £4.92 per hour (an increase
of 1.8%). This increase is based on the projected rise in consumer
prices index (CPI) inflation.
- The national minimum wage youth rate (for workers aged 16 and 17)
will rise from £3.57 per hour to £3.64 per hour (an increase of 1.9%).
This increase is also based on CPI forecasts;
- An apprentice minimum wage rate of £2.50 per hour will be
introduced. The LPC recommends that the apprentice rate be "applied as a
single rate to those apprentices currently exempt from the National
Minimum Wage. That is all those under the age of 19 and those aged 19
and over in the first 12 months of their apprenticeship. The wage should
cover both those employed on traditional contracts of apprenticeship
and employed apprentices on government-supported Level 2 and 3 schemes."
The
Budget 2010 report (PDF format, 3.47MB) (external
website) included the following official statement on the level of the
national minimum wage adult rate uprating for 2010/2011:
This increase strikes a balance between helping low paid workers and
families, and ensuring that the rise does not damage their employment
chances. When increased in October 2010, the NMW will have risen by over
22% in real terms since the Government introduced it in 1999.
CBI deputy director-general John Cridland was
supportive of the national minimum wage increase (external website), commenting:
This moderate increase recognises that many businesses are
struggling, and helps protect jobs at a time of rising unemployment. The
inflation-busting rise some unions had called for would have hit firms
hard and put many lower paid workers on the dole.
The
TUC's reaction to the national minimum wage increase was largely similar (external website). TUC General Secretary Brendan Barber comments:
Once again the Low Pay Commission has managed to resist employer
calls for a freeze and has been able to agree a modest increase to the
minimum wage rate despite the difficult economic times. [...] This is a
relatively modest increase which the evidence shows employers can
afford.
Update (Sunday 8 May 2011): National minimum wage 2011/2012: How will the 2.5% increase to £6.08 for October 2011 stack up against inflation?
With private sector pay expectations subdued, the 2011/2012 national
minimum wage increase could prop up whole economy pay awards in the
closing months of 2011. But how will it compare with inflation? It was
announced on Thursday 7 April 2011 that the national minimum wage adult
rate will increase to £6.08 per hour for 2011/2012, with effect from 1
October 2011. This represents an increase of 2.5% from the 2010/2011
national minimum wage adult rate, which currently stands at £5.93 per
hour (from 1 October 2010 to 30 September 2011). The 2011/2012 national
minimum wage adult rate (at £6.08 per hour) is therefore set 15p per
hour higher than the 2010/2011 rate. The BBC's Robert Peston commented
via Twitter that the "announced increase in the [national] minimum wage
of 2.5% to 608p is considerably less than current rate of inflation."
Update (Thursday 7 April 2011) >> National minimum wage 2011/2012 announced:
The national minimum wage adult rate will increase to £6.08 per hour
for 2011/2012, with effect from 1 October 2011. This represents an
increase of 2.5% from the 2010/2011 national minimum wage adult rate,
which currently stands at £5.93 per hour (from 1 October 2010 to 30
September 2011). The 2011/2012 national minimum wage adult rate (at
£6.08 per hour) is therefore set 15p per hour higher than the 20102/011
rate.
According to the Department for Business, Innovation and Skills (BIS) the
national minimum wage rates for 2011/2012 will be as follows:
The following rates will come into effect on 1 October 2011:
- The adult rate will increase by 15p to £6.08 an hour;
- The rate for 18-20 year olds will increase by 6p to £4.98 an hour;
- The rate for 16-17 year olds will increase by 4p to £3.68 an hour; and
- The rate for apprentices will increase by 10p to £2.60 an hour.
Business Secretary Vince Cable comments:
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. I would like to thank the LPC for doing a good job
in difficult circumstances.
The
BBC's Robert Peston comments via Twitter:
Today's announced increase in the minimum wage of 2.5% to 608p is considerably less than current rate of inflation.
See also:
