As with previous years the LPC will monitor, evaluate and review the National Minimum Wage (NMW) and its impact, and review the levels of each of the different minimum wage rates.
This year the LPC is also asked to pay particular attention to:
the competitiveness of small firms; and
the employment prospects of young people, including those in apprenticeships and internships.
The LPC will report to the Prime Minister and the Secretary of State for Business, Innovation and Skills by the end of February 2011, with their recommendations for October 2011.
The Government has also today announced its response to the recommendations in the LPC’s 2010 report and laid regulations to bring these into force.
The new rates, which will come into effect on 1 October 2010 will be:
£5.93 per hour for low paid workers aged 21 and over, increased from £5.80;
£4.92 per hour for 18-20 year olds, increased from £4.83; and
£3.64 per hour for 16-17 year olds, increased from £3.57.
For the first time there will also be an apprentice minimum wage of £2.50 per hour. The new rate will apply to those apprentices who are under 19 or those that are aged 19 and over but in the first year of their apprenticeship.
Employment Relations Minister Edward Davey said:
“The increases to the National Minimum Wage this year are appropriate for the economic climate. They will strike a balance between helping the lowest paid whilst at the same time not jeopardising their employment.
“The Low Pay Commission estimates that around 970,000 people stand to benefit from these increases.
“Workers on the National Minimum Wage are disproportionately likely to be employed by small firms and so it is right the Low Pay Commission considers their competitiveness when they make their recommendations for next year. SMEs will be vital to our economic recovery”.
Notes for editors
The Low Pay Commission was established following the National Minimum Wage Act 1998 to advise the Government about the National Minimum Wage. Commissioners have backgrounds in business, trades unions and academic labour relations. For more details, and copies of the full report, see http://www.lowpay.gov.uk/
When the minimum wage was launched in 1999, the main rate was £3.60.
The LPC makes recommendations to the Government in its annual report. In addition to the rate increases, the Government has accepted the recommendations that:
- there should be a single apprentice minimum wage rate of £2.50 per hour for those apprentices currently exempt from the National Minimum Wage;
- there should be specific guidance on the National Minimum Wage for the entertainment sector; and
- that HMRC investigates whether contract and agency cleaners in the hotel sector are receiving their entitlement under the National Minimum Wage for their hours worked.
The Government notes the Commission’s recommendation that there should be a commitment, as a minimum, to maintaining current funding in real terms for monitoring and enforcement of the National Minimum Wage until at least March 2014.
The accommodation offset will rise from £4.51 per day to £4.61.
The Pay and Work Rights helpline number is 0800 917 2368. As well as receiving and investigating complaints about non-payment of the minimum wage, the helpline offers advice and information in more than 100 languages.
The Low Pay Commission estimates that just over 950,000 people stand to benefit from the increase.
The remit for the Low Pay Commission’s 2011 report is to:
Monitor, evaluate and review the NMW and its impact, with particular reference to:
the effect on pay, employment and competitiveness in the low paying sectors, with particular reference to the competitiveness of small firms;
the effect on the pay structures and employment of different groups of workers, including in particular different age groups, women, ethnic minorities, people with disabilities and migrant workers.
Review the labour market position of young people, including those in apprenticeships and internships.
Review the levels of each of the different minimum wage rates and make recommendations for October 2011.
Review the arrangements for the apprentice minimum wage.
Report to the Prime Minister and the Secretary of State for Business, Innovation and Skills by the end of February 2011.
Notes to Editors
BIS Press Office