Minimum Wage Increase

The government increased the National Minimum Wage (NMW) on 1 October. The biggest difference affects workers aged 21 and over. Their pay rate increased by 15p which pushed their NMW to £6.08 an hour. Those aged 18-20 received a 6p increase. Their NMW is now £4.98 per hour. 16-17 year-olds gained a 4p increase, which makes their hourly rate £3.68. Finally, apprentices benefitted from a 10p increase, making their NMW £2.60 an hour. (Figures from direct.gov.uk).

“The TUC estimates that around 900,000, mainly female workers, will benefit from the increases” (BBC News, ‘Minimum Wage Up’).

Good news for those in work. However, “an unexpected surge in the number of jobless youths in Britain has contributed to the largest increase in unemployment in almost two years”, says the Telegraph’s Louisa Peacock (‘Youth Unemployment Surge’).

The Low Pay Commission assesses whether the NMW should change and advises the government accordingly. This year, the LPC decided that due to youth unemployment figures, a smaller increase for the under-21s would encourage employers to keep them in work (BBC News, ‘Minimum Wage Up’).

The TUC (Trades Union Congress) welcomed the increase, but Unison stated that the hourly pay is still not enough. Unison want the NMW to be increased to at least £8 an hour (BBC News, ‘Minimum Wage Up’). Indeed, it is difficult to see how much of a discernable impact the current increase will have with the rise of VAT to 20% last January.

However, Mark Littlewood from the Institute of Economic Affairs states that the NMW should be scrapped “because it prices young and inexperienced people out of work” (BBC News, ‘Minimum Wage Should Be Scrapped’). Consequently, the NMW might actually prove detrimental for workers if employers are unable or unwilling to pay the set rate.

What do you think? Should the NMW be increased further or scrapped altogether? Sound off in the comments section below.