Minimum wage to rise in October

The national minimum wage is set to increase from £5.05 to £5.35 per hour for adults from October.

The rate for workers aged between 18 - 21 will increase from £4.25 to £4.45, while workers aged 16 and 17 will see their hourly rate increase from £3 to £3.30.

The rises will guarantee higher pay for around 1.3 million workers.

Commenting on the rise, Trade and Industry Secretary Alan Johnson said: "It's right that at a time when our economy is generally strong with the longest ever period of sustained growth and nearly 2.4 million more jobs than 1997, that we continue to help those who get paid the least.

However, the CBI warned that companies were struggling to cope with the impact of the minimum wage increases. CBI Director-General Sir Digby Jones said: "The minimum wage jumped 12% between 2003 and 2005 - a rate of increase far in excess of average earnings growth. More and more companies are finding it difficult to absorb the rise so another 6% will be the last thing they need."

"The Commission shares our aim to help the low paid through an increased minimum wage, while making sure that we do not damage their employment prospects by setting it too high. They have concluded that there is no strong evidence to support the contention that the minimum wage has had any detrimental effect on employment levels in low paying sectors.

The British Chambers of Commerce warned that the increase could have an "adverse effect" on employment. David Frost BCC Director General said: "Businesses cannot cope with more costs which are damaging their ability to compete. We cannot continue increasing the minimum wage at the pace at which it has increased in recent years."

However, Mr Johnson said: "The (Low Pay) Commission shares our aim to help the low paid through an increased minimum wage, while making sure that we do not damage their employment prospects by setting it too high. They have concluded that there is no strong evidence to support the contention that the minimum wage has had any detrimental effect on employment levels in low paying sectors."

However, the outgoing Chairman of the Low Pay Commission, Lord Turner, said that the Commission had concluded that the phase in which the Commission was committed to increases in the minimum wage above average earnings was now complete. He said: "Looking forward, the Commission will start with no presumption that further increases above average earnings are required."

The government has also announced that it will accept the recommendation that salary sacrifice schemes, including those for childcare vouchers, should not count towards the minimum wage and also consider the recommendation that the Commission review the apprenticeship exemptions in 2008.

The government also said that it would take into account the recommendation that enforcement should be stepped-up in sectors that employ migrant workers when considering sectors for targeted enforcement action in the future.

Since the minimum wage was introduced in 1999, it has been increased every year.

(KMcA)