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Minimum wage raised for adults, but not young

21 March 2012

Minimum wage raised for adults, but not young Posted by Editorial team

The national minimum wage will be increased to £6.19 per hour for adults this year, but the salaries of young personnel are to remain at their current rate.

The Department of Business, Innovation and Skills accepted the recommendations of the Low Pay Commission (LPC) to rise the rate by 11p for workers over aged 21 and over from October 1st 2012.

Payroll staff in the Britain's largest companies will also be switching over to automatic enrolment of staff into pensions that day.

However, it will not be obligatory for them to change the salaries of individuals aged 16 and 17, whose minimum rate will remain at £3.68 per hour, or 18 to 20-year-olds, who will continue to earn £4.98 per hour.

Chair of the LPC David Norgrove said the Commission was unanimous on its decision, arguing: "We believe we have struck the right balance between the needs of workers and the challenges faced by employers."

Business secretary Vince Cable added the move was a difficult one to make, but argued "raising youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run."

But not everybody agrees with this statement, with general secretary of the Trades Union Congress Brendan Barber claiming it is still possible to bring youth wage improvements in line with the rate of inflation, even in these tough times.

"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," he commented.

The Child Poverty Action Group also criticised the government, with chief executive Alison Garnham warning the action is "another turn of the screw" for low-income families.

Mr Barber argued a rise in the minimum wage would help, not hinder, the economy, because workers who are on a small salary tend to pump their income back into their local areas.

He said the government should be encouraging further consumer demand, stating it is a lack of spending that is affecting businesses and this is why businesses are worried about paying their employees a higher rate.

The Confederation of British Industry's chief policy director Katja Hall, however, welcomed the decision stating that "hard-pressed" firms will be relieved not to have to raise wages too much at a time when consumer-facing companies are struggling.

She also suggested the move will improve recruitment levels of youth workers - something many will be eager to see, with the Office for National Statistics recently reporting the unemployment rate for those aged between 16 and 24 was at 22.5 per cent in the three months to January 2012, up 0.4 percentage points from the previous quarter.

There were 1.04 million people in this demographic without jobs, although most were in full-time education, with the number in roles dropping by 32,000 compared with the period between August and October.

Ms Hall stated: "Freezing the minimum wage will help reduce one of the barriers to employers deciding whether or not to take on a young person."

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