National minimum wage increases

March 6 2008 - The Government has announced that the adult minimum wage rate will rise from £5.52 to £5.73 an hour in October. The youth rate for those aged 18 to 21 will be increased from £4.60 to £4.77. The Government has also said that the rate for workers aged 16-17 years should increase from £3.40 to £3.53.

The National Minimum Wage was first introduced on 1 April 1999. The main rate was set at £3.60 (for workers aged 22 and over) and £3.00 (workers aged 18-21 years old).

Business Secretary John Hutton said:

"The National Minimum Wage remains one of the most important rights introduced by the Government in the last decade. Before it was introduced, some workers could expect to be paid as little as 35p an hour, our legislation has ensured that can no longer happen.

"I am proud of the minimum wage; it makes a real difference to the lives of many of our lowest-paid workers and protects them from exploitation. It also creates a level playing field for business and boosts the economy."

Paul Myners, chairman of the Low Pay Commission commented:

"This increase means that the minimum wage will have risen by 59 per cent since it was introduced in April 1999 - almost double the expected growth in prices over the same period. Despite many predictions to the contrary, job numbers in the industries most affected by the minimum wage have grown and grown significantly over the same period."

The Government is also tightening up enforcement of the minimum wage with new measures, including:

• A fairer way of dealing with national minimum wage arrears, calculated to ensure that employees do not lose out as a result of underpayment.
• Tougher penalties for employers who break the law, increasing the maximum penalty for non-payment of the National Minimum Wage from £5,000 to an unlimited fine. Serious cases of non-compliance will be tried in a Crown Court.

Welcoming the announcement, TUC General Secretary Brendan Barber said:

"We welcome this increase in the minimum wage, which will benefit more than a million low paid workers.

"The Low Pay Commission was right to withstand pressure from business warning of economic trouble ahead. The truth is that employers will be able to absorb these sensible increases without too much difficulty.

"The LPC must continue to recommend the highest minimum wage increases that can be sustained as it provides very important protection for low paid workers.

"Bosses who fail to pay the minimum wage leave vulnerable workers in poverty and undercut the majority of employers who are happy to obey the law. Everybody stands to gain from making the minimum wage as robust as possible. We support the improvements to the enforcement regime that are currently going through parliament, and look forward to the introduction of tougher penalties for cheating employers and fair arrears for underpaid workers later in the year."

See also:

Top Ten Excuses For Not Paying Minimum Wage

Call for National Minimimum Wage increase formula

More Employee Rewards Articles