The national minimum wage rates paid to workers aged under 21 should be frozen at their current level (PDF format, 1.5MB) (external website) when the 2010/2011 national minimum wage uprating comes into effect on 1 October 2010, according to the CIPD. The CIPD argues that freezing the statutory pay floor for younger workers would help "ensure welcome government efforts to combat soaring youth unemployment are not fatally undermined just as the economy is beginning to recover".
Official data indicate that unemployment among young people has risen sharply as a direct result of the recession. Former Bank of England Monetary Policy Committee (MPC) member David Blanchflower has been a particularly strident campaigner for official policy to combat the disproportionate impact of unemployment on this demographic group (external website). Blanchflower says:
Unemployment is going to be a big problem for a while and what's most alarming is the million unemployed youngsters. We have this demographic bulge - there are more 23- to 24-year-olds today than there have been or will be for 20 years, so we're in a spike when the labour market is bad.
CIPD chief economic advisor John Philpott argues that freezing the national minimum wage for younger workers is in line with pay policy in the wider economy, and is essential to safeguard the jobs held by those in employment. According to Philpott:
Pay restraint is likely to be a feature of the year ahead as employers and employees continue to work together to minimise job losses. It is right that younger workers lucky enough to have jobs should play their collective part in helping maximise the chances for those who do not.
However, the CIPD believes that not all workers covered by the national minimum wage should have their pay frozen in 2010/2011. It argues that the national minimum wage adult rate (which will be extended to apply to 21 year olds from October 2010) should be increased in line with retail prices index (RPI) inflation for March 2010. The CIPD argues that such an increase would be "nominal". This is in contrast to the views of many economic commentators, who predict that RPI will rise sharply over the coming months, driven up by rising fuel costs and the reversal of the VAT cut. Such an RPI-linked increase to the adult national minimum wage could therefore prove significantly less "nominal" than the CIPD expects.
The CIPD's recommendations on the 2010/2011 national minimum wage uprating are part of a pre-election "manifesto", setting out what it describes as "the CIPD's policy priorities for work in a year which is likely to see economic recovery - but in a slow and faltering form". Other recommendations include:
- a freeze to the public sector paybill;
- abandonment of the increase to employers' national insurance contributions (NICs) planned for 2011; and
- the removal of the default retirement age.
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