Government approves new £5.80 minimum wage

The government has announced new national minimum wage rates which will come into effect in October.

Workers aged 22 and over will see an increase from £5.73 to £5.80 an hour, while wages for 18 to 21-year-olds will also rise from £4.77 to £4.83 and for 16 and 17-year-olds, the rate increases to £3.57 an hour from £3.53.

Business secretary Lord Mandelson said: “The national minimum wage has been in place for 10 years and remains one of the most important rights for workers introduced in that time.

“I am very proud of the difference it has made to the lives of the UK’s lowest-paid workers. It protects them from exploitation and also creates a level playing field for business, making a huge contribution to the UK’s economic success.”

But Charles Cotton, reward adviser at the Chartered Institute of Personnel and Development (CIPD), says the rise could be to the detriment of younger workers.

“We have advised a freeze on the minimum wage in light of the recession, particularly following the 21p increase in 2008, on the grounds that keeping people in work and maximising job opportunities must be a priority.

“While we support the Low Pay Commission (LPC), we are concerned that this decision will increase the risk of job losses in low paid sectors. This should have been avoided at a time when deflation on the RPI measure of inflation will limit the impact of a national minimum wage freeze on people’s real living standards.

“Instead of increasing the minimum wage, we’d argue that energies should be focused on a temporary job creation programme targeted directly at the young unemployed or long-term unemployed. This could operate as a last resort for jobless people for whom the other existing measures have not proved suitable.”