The national minimum wage for adult workers, as it currently stands, is £6.08 per hour (SI 2011/2345 National Minimum Wage (Amendment) Regulations 2011, s. 3). In October 2012, this is set to increase to £6.19 per hour (an increase of 11p per hour). This represents a rise of 1.8%, but this is less than the rate of inflation.
While this is a fairly modest rise in the minimum wage rate, of more concern is the fact that the minimum wage rate for 18-20 year olds will remain at £4.98 p/hr (SI 2011/2345 NMW(A)R 2011, s.5) and the rate for 16-17 year olds will also be frozen at the current rate of £3.68 p/hr (ibid). The rate for apprentice workers is set to increase to £2.65 p/hr (currently £2.60 p/hr under s.5 of SI 2011/2345 NMW(A)R 2011). Given that the cost of living in 2011 rose by 3.6%, these increments seem of little worth. It is important, though, to consider the reasons behind these decisions.
Vincent Cable, the Business Secretary, has stated that the decision represents the ‘right balance between pay and jobs’. He later argues that an increase in the wage rates for young workers would offer a false benefit to the workers if it was to increase the difficulty of finding a minimum wage job.
There are obviously competing interests between the employer and employee, and both parties have a strong argument in favour of freezing the minimum wage and increasing the wage respectively. Perhaps my own stance is purely dictated by my own circumstances (not being an employer), but I’m inclined to side with the employees. It is hard enough to find any job currently, and this could be one of the reasons why people are working on the minimum wage in the first place. It also does not provide those currently seeking job seekers’ allowance or employment benefit much of an incentive to find work. Vincent Cable hints at the fact that increasing the current rate of the national minimum wage might make finding a job more difficult, but is this necessarily so? Employers already seem reluctant to take on many new employees, so would an increase in the minimum wage rate make much of a difference?
What do you think? Read the article here: http://www.bbc.co.uk/news/business-17429325