On 17th March, it was announced by the Prime Minister and Deputy Prime Minister that the government have accepted the Low Pay Commission’s recommendation to increase the National Minimum Wage by 3% to the new rate of £6.70 per hour, commencing 1st October 2015.
This is the largest real-terms increase in the national minimum wage since 2008, benefiting more than 1.4 million lower-paid workers.
The government rejected the Low Pay Commission's recommendation to increase the apprentice rate by 2.6% (to £2.80). Instead, the government has approved an increase of 20%, or 57p, to £3.30 per hour. This is the largest-ever increase to the National Minimum Wage for apprentices. By rejecting the Low Pay Commission’s recommendation and implementing a higher rate, the government hopes that apprenticeships will offer a viable career path and a wage comparable to similar types of work.
Alongside the changes, Business Secretary Vince Cable is planning to launch the National Minimum Wage Accelerator, an online tool to make it easier to compare rates of pay across different regions, sectors and occupations. The National Minimum Wage Accelerator is designed to encourage employers to discuss pay rates with their employees, subsequently increasing their wages where necessary. By facilitating and encouraging wage comparison, Cable believes businesses will need to consider if increasing their levels of pay is appropriate in order to attract the best employees.
How the National Minimum Wage is calculated
The Low Pay Commission is an independent statutory body created by the National Minimum Wage Act 1998 to advise the government on National Minimum Wage rates. Each February, the Low Pay Commission submits a report to the government with recommendations for the future levels of minimum wages. Creating this report involves consultation with employers, employees and representatives, surveying firms in low-paying sectors and participating in fact-finding visits to workplaces.
New Rates from 1st October 2015
|Age Group||New Rate||Percentage of Increase|
|Workers age 21 and older||£6.70||3% (20 pence)|
|Workers age 18–20||£5.30||3% (17 pence)|
|Workers age 16–17||£3.87||2% (8 pence)|
|Apprentices||£3.30||20% (57 pence)|
Image courtesy of Number 10, The Prime Minister's Office