News

March 27, 2012

Government announces new National Minimum Wages rates

National Minimum Wage (NMW) rates are to rise from October, the Government has announced.

Adult and apprentice hourly pay rates for NMW will rise from October, while youth rates for those aged up to 20 remain the same. From 1 October 2012:

• The adult rate (currently £6.08) will rise by 11p to £6.19 an hour.
• The rate for apprentices will increase by 5p to £2.65 an hour.

These rates are frozen:

• The rate for 18- to 20-year-olds will remain at £4.98 an hour.
• The rate for 16- to 17-year-olds will remain at £3.68 an hour.

The adult rate sees a rise of 1.8%, which is less than inflation (3.6%), but slightly higher than pay increases that ran through 2011 at 1.4%. Of the unchanged youth rates, business secretary Vince Cable said: 

“In these tough times freezing the youth rates has been a very hard decision, but raising them 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.”

Confederation of British Industry chief policy director Katja Hall said: “Businesses will welcome the approach taken to this year’s NMW rates. The moderate rise in the adult rate and the freeze in the youth rates will come as a relief to the many hard-pressed firms right across the country.”

John Longworth, director general of the British Chambers of Commerce also welcomed the freezes: “Business has been telling the Government for some time that the minimum wage cannot be a one-way bet, particularly when we have over one million young people unemployed.”

But Longworth argued that the rate rise for adults could damage employers: “While the pressures of inflation are hurting many people, especially the lowest paid, this decision adds significantly to the cost of doing business, and feeds wage inflation at higher levels.”