Government approves new £5.80 minimum wage rate

The government has announced new National Minimum Wage rates to take effect in October. Low paid workers aged 22 and over can look forward to a minimum wage of £5.80 an hour, an increase of 7p from the current rate if £5.73. Additionally, the rate for 18 to 21-year-olds will also rise 6p from £4.77 to £4.83. For 16 and 17-year-olds, the rate will go up to £3.57 an hour from £3.53. Nearly one million people will benefit from October's increase after the government approved recommendations from the independent Low Pay Commission. Business Secretary Lord Mandelson said: "The National Minimum Wage has been in place for 10 years and remains one of the most important rights for workers introduced in that time. "I am very proud of the difference it has made to the lives of the UK's lowest-paid workers. It protects them from exploitation and also creates a level playing field for business, making a huge contribution to the UK's economic success." However the Chartered Institute of Personnel and Development has warned that in a time of recession, the increase in minimum wage could have a negative impact on younger workers.Charles Cotton, Reward Adviser of the CIPD says: “We have advised a freeze on the minimum wage in light of the recession, particularly following the 21p increase in 2008, on the grounds that keeping people in work and maximising job opportunities must be a priority. While we support the Low Pay Commission (LPC), we are concerned that this decision will increase the risk of job losses in low paid sectors. This should have been avoided at a time when deflation on the RPI measure of inflation will limit the impact of a National Minimum Wage freeze on people’s real living standards. “Our greatest concern at the moment is for younger workers and job seekers. The Office of National Statistics (ONS) has shown that the recession is having a far bigger impact on employment for young people. In this context, we are pleased that the LPC has not given a disproportionate increase to younger workers.“However, instead of increasing the minimum wage, we’d argue that energies should be focused on a temporary job creation programme targeted directly at the young unemployed or long-term unemployed. This could operate as a last resort for jobless people for whom the other existing measures have not proved suitable.”

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