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Minimum wage set to rise this October

The national minimum wage for adults is to rise to £5.80 an hour as from October.

The government has accepted the Low Pay Commission’s recommendation of a 7 pence increase from £5.73.

Other hourly rates are also to rise. The rate for 18 to 21-year-olds will increase from £4.77 to £4.83, while for 16 and 17-year-olds the rate will go up to £3.57 an hour from £3.53.

In addition to the rate changes that will come into effect this year, the government has said that, as from October 2010, the adult rate of the minimum rate will be extended to include 21-year-olds.

The date set for the submission of the LPC’s recommendations on the new rates for the minimum wage was moved from February to May in order to allow Commissioners to take the latest economic evidence into account during their deliberations.

The LPC also proposed that information should be made available about those employers who have shown a wilful disregard for the minimum wage laws. The government said it would look at the practical issues involved.

George Bain, the chairman of the LPC, commented on the decision: “These are very challenging times for the UK and unprecedented economic circumstances for the minimum wage. We believe that the Low Pay Commission’s recommendations are appropriate for this economic climate. They reflect the need to protect low-paid workers’ jobs as well as their earnings.”

Lord Mandelson, the Business Secretary, added: “The Low Pay Commission has carefully examined the latest economic data before making their recommendations on the minimum wage rate, balancing the needs of workers and businesses in the current economic climate.

“The government agrees with this assessment and has accepted the recommendations for these new rates to take effect in October.”

Business groups had been arguing the case for holding the minimum wage at its current levels for this year but were not too dismayed by the moderate increase.

David Frost, the director general of the British Chambers of Commerce, said: “We pressed for a freeze to the minimum wage because of the severity of the downturn and the daily loss of jobs. We are pleased that the increase is only a modest one, and it shows that the Low Pay Commission and the government have largely understood the seriousness of the situation. However, a freeze in the NMW would have been more help to business.”

John Cridland, the CBI’s deputy director-general, commented: “This moderate increase recognises that many businesses are struggling, and helps protect jobs at a time of rising unemployment.

“Over the past decade, the minimum wage has risen faster than average earnings and inflation, and a sensible, cautious approach now will help ensure this landmark piece of legislation continues to improve the lives of low paid workers for many years to come.”