Minimum Wage set to rise in October

The adult National Minimum Wage (NMW) will rise from £5.52 to £5.73 in October, Prime Minister Gordon Brown has announced.

For 18-21 year-olds the hourly rate will climb from £4.60 to £4.77, whilst the statutory minimum wage will increase from £3.40 to £3.53 for 16 and 17 year-olds.

Business Secretary John Hutton said: ‘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.’

The Department of Business, Enterprise and Regulatory Reform estimates that nearly one million workers will benefit from the October NMW increase, with women thought to account for two thirds of this figure.

‘This increase means that the minimum wage will have risen by 59% since it was introduced in April 1999 - almost double the expected growth in prices over the same period,’ confirmed Paul Myners, chairman of the Low Pay Commission.

The Federation of Small Businesses (FSB), which had expressed concerns over past above-inflation increases, has welcomed the latest rise.

‘A way forward to improve the position of low earners is for the Government to give serious consideration to increasing the earnings threshold for tax purposes for those at the lower end of the scale,’ advised Alan Tyrrell, FSB Employment Chairman.

Under new measures outlined by the Government, rogue employers who fail to comply with the NMW legislation could incur an unlimited fine, whilst the most serious cases may be referred to the Crown Court.