National Minimum Wage to rise above £5

[payroll]

ReferenceTI press release 25.2.05

Patricia Hewitt Secretary of State for Trade and Industry has announced that the National Minimum Wage will rise to £5.05 in October 2005 and to £5.35 in October 2006. The youth rate for 18-21 year olds will rise to £4.25 from the same date and £4.45 next year. The case for moving 21 year olds on to the adult rate is still under review.

The 16/17 year old rate will not be reviewed until 2006.

There is also a significant potential shift in policy in this announcement as she says that the Low Pay Commission will review the case for allowing Benefits-in-Kind under salary sacrifice to be considered for inclusion in NMW pay. We, and others, have been lobbying for this as many low paid workers cannot benefit from the new tax/NICs childcare relief from April as they have insufficient earnings that could be sacrificed without going below National Minimum Wage, as benefits cannot currently be counted as part of pay for NMW. We will ensure your views are fed in to this review.

 

[Eagle]

...Patricia Hewitt Secretary of State for Trade and Industry has announced that the National Minimum Wage will rise to £5.05 in October 2005 and to £5.35 in October 2006...

That's just election talk; it'll never materialise. Not in that time-frame anyway.

 

[Ozzy]

I understand the principle behind the minimum wage, but there are many cases where this could put a lot of businesses out of business!

 

[payroll]

Internet: http://www.dti.gov.uk




Date: February 25, 2005 Time: 11:15

MINIMUM WAGE ABOVE 5 THIS OCTOBER

Guaranteed pay rise for 1.3 million low paid workers

The national minimum wage will rise above 5 for the first time from October 2005, Trade and Industry Secretary Patricia Hewitt announced today.

The adult rate of the minimum wage will increase from 4.85 to 5.05 in October 2005 - in line with average earnings - with a further six per cent increase to 5.35 in October 2006.

The rise is in line with the recommendation of the Low Pay Commission, and takes the minimum wage, in 2006, to almost 50 per cent above its 1999 introduction rate.

The latest increases will extend coverage of the minimum wage to 1.3 million workers in October 2005 and 1.4 million workers in October 2006. Announcing these increases Mrs Hewitt said:

"The great news is that well over a million workers will receive a guaranteed pay rise by this October, rising to almost a million and a half people by October 2006.

"The minimum wage has made a real difference to the lives of thousands of low paid workers - particularly women, who make up some 70 per cent of those benefitting. Year on year increases protect some of society's most vulnerable people from exploitative rates of pay.

"Despite predictions to the contrary, the national minimum wage has not affected the job prospects of low-paid workers in the UK. Unemployment is at record low and a record 28 million people are now in work."

The Government has also:

* agreed that the Low Pay Commission should review the 2006 rates, taking into account the latest economic conditions;

* agreed that the youth rate, which applies to 18-21 year olds, should rise to 4.25 in October 2005 and 4.45 in October 2006;

* agreed that the Commission should review the operation of the 16-17 year old rate and report in 2006;

* announced that it will keep the issue of whether to put 21 year old workers onto the adult rate under review; and

* agreed that the Commission should review the minimum wage treatment of benefits in kind including where those benefits are offered as part of a salary sacrifice arrangement.

Ms Hewitt also announced more than 3 million has been recovered from bosses who have not been paying the national minimum wage since April 2004. The total amount recovered from employers since the introduction of the national minimum wage in April 1999 is now nearly 20 million. The Government will shortly be announcing further measures to tackle serious non-compliant employers.

Notes to Editors:

1. The Low Pay Commission (LPC) was established as a result of the National Minimum Wage Act 1998 to advise the Government about the minimum wage, particularly on the rates.

2. The Low Pay Commission's report is available from the Stationary Office bookshops or the Commission's website:
http://www.lowpay.gov.uk

3. The minimum wage is enforced by the Inland Revenue on behalf of the DTI.

4. Anyone who thinks they are not being paid the minimum wage should call the helpline on 0845 6000 678, Scotland 0845 600 1768, Northern Ireland 0845 650 0207 or use the interactive website -
http://www.tiger.gov.uk - which provides guidance for both employers and employees. Information is also available at www.dti.gov.uk/er/nmw

5. Number of jobs that will be covered by NMW increase from October 2005 and October 2006 by region.

Region 2005 2006
South East 110,000 120,000
Wales 70,000 80,000
Eastern 100,000 110,000
E Midlands 120,000 130,000
London 90,000 100,000
N Ireland 50,000 50,000
North East 80,000 90,000
NW & Mersey 160,000 180,000
Scotland 140,000 150,000
W Midlands 140,000 150,000
York & Humber 140,000 140,000
South West 110,000 120,000
Total 1,310,000 1,420,000

Source: DTI estimates

Note: These data are based on 10p pay bands from the ONS's Annual Survey of Hours and Earnings and take account of earnings and prices inflation between the period Spring 2004 and October 2005/ October 2006 Source: DTI estimates based on ONS's Spring 2004 Annual Survey of Hours and Earnings

Department of Trade and Industry

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www.dti.gov.uk

 

[Rob Holmes]

Hey I can give myself a payrise then

Rob

 

[BMS]

What about the companies that have different pay rates for weekdays and Saturdays and Sundays.

Th rise in minimum wage does not necessarily relate to weekend rates and some unscrupulous companies comply with minimum wages but are not persuaded to raise the weekend rates and therefore people who have to work weekends are penalised by comparitively less conducive rates.

Surely if the government is concerned about the financial well being of the masses then it should enforce a minimum wage for weekend work at x% above minimum wage.

 

[I, Brian]

We, and others, have been lobbying for this as many low paid workers cannot benefit from the new tax/NICs childcare relief

Maybe not, but the Working Tax/Child Credits are more than generous, so all the government are really doing is shifting the payments to the employer, not the government.

 

[Desmond Brambley]

Some years ago, before I went out to do my own thing, I worked in a company where 95% of the employees were single mothers in receipt of family tax credits.

Most of them, by their own admissions, had become pregnant to obtaimn free housing and decent social welfare payments. Three of the women there had cut all ties with the father of the child, because that meant they could get more money from the state. Thses aren't cheap shots at the female gender, just reporting what I saw and heard, however, what did really cheese me off with the situation was that I (being a single male) was working full-time and overtime and still taking home less than they were, and they were working part-time! I still don't understand how that works!

In relation to the minimum wage - yes it could put a lot of small businesses down the pan, but there has to be some form of social responsibility with business too.

When the minimum wage council was abolished in 1993, wages fell through the floor - the lowest I saw advertised was a truely horrific £1.14 an hour for a 39 hour week. Take the tax out of that and the worker would be earning less than the dole at that time. There was a disincentive to work. The same will happen again if the mimimum wage is abolished once again.

The worker needs as much protection as the business owner - one without the other isn't a viable situation.