Payroll - Minimum Wage to Increase in October 2011

The national minimum wages is going to increase by 15p after the Government confirmed it would apply recommendations made by the Law Pay Commission.
The rise will see the adult minimum wage rate increase from £5.93 to £6.08 an hour, the Youth Development Rate rise from £4.92 to £4.98 an hour and the 16-17 Year Old Rate increase to £3.68 from £3.64 an hour. The Apprentice Rate will also increase from £2.50 to £2.60 an hour.
But growing youth unemployment means other age groups will see a lower proportional increase “to help protect their labour market position,” explained the Low Pay Commission, which advised the government on the new levels. Although all the pay rises are well below the current rate of inflation – RPI currently stands at 5.5 per cent – the news was welcomed by the TUC.

These rises are relatively modest to most payroll services, but they will provide a welcome pay boost for around 840,000 low-paid workers in the UK. But Unite branded the”paltry” increases for 16-20 year olds an “insult”. “This small increase in the minimum wage is completely outstripped by the current rate of inflation,” said Unite general secretary, Len McCluskey.

Business groups also reacted negatively to the government’s move – although they claimed the increases were excessive during a time of economic recovery. The British Chambers of Commerce (BCC) described it as “the wrong increase, at the wrong time”. “Youth unemployment is at a record high and we can’t afford to price young people out of work,” said David Frost, BCC’s director-general.

It’s clear from speaking to businesses that a significant number have to freeze wages in 2011. These changes will be a barrier to job creation, and ultimately economic recovery.

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Scott Muller
Managing Director
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Email: scott@citylightspps.com