The government has announced that the national minimum wage for adults will increase by 15p from October 2011 to £6.08 an hour. The 2.5% increase was recommended by the independent Low Pay Commission (LPC). The rate for apprentices will rise by 10p, for 16-17 year-olds by 4p and for 18-20 year-olds by 6p. Business Secretary Vince Cable said the changes would help more than 890,000 of Britain’s lowest paid workers, and would be a welcome boost particularly in areas blighted by poverty.
But with consumer price inflation at 4.4%, the Unite union said the 2.5% raise would do little to help low-paid workers keep up with rising food and fuel prices. “This small increase in the minimum wage is completely outstripped by the current rate of inflation,” said Unite general secretary Len McCluskey.
Meanwhile, The British Chambers of Commerce (BCC) think that the increase has come at precisely the wrong time and will add more financial worries to employers who are struggling to meet wage bills already. The BCC said the changes risked pricing young people out of work when youth unemployment was at a record high. “The change to the national minimum wage rates announced today is the wrong increase, at the wrong time,” said BCC’s David Frost. “These changes will be a barrier to job creation, and ultimately economic recovery.”
It seems that the government’s honeymoon period is well and truly over and that when it comes to the NMW, they’re damned if they do and damned if they don’t. The increase certainly falls well short of covering the cost of rising inflation prices, and with small businesses cutting workforces and struggling to pay wage bills already, the 15p increase could represent a tipping point for many. The NMW usually passes off with minimum comment. The furore from both sides of the fence this time shows just how shaky the economic situation – and consequently the jobs market – still is.