National Minimum Wage to rise to £5.80 in October 2009

The National Minimum Wage is to rise from £5.73 to £5.80 an hour from 1 October 2009, the government has announced.

The 1.2% increase is the lowest since a statutory minimum wage was introduced in April 1999, and is likely to significantly influence pay settlements across the wider economy during the final months of 2009.

Today's announcement means that the National Minimum Wage will rise:

• From £5.73 to £5.80 an hour for workers aged 22 and over;
• From £4.77 to £4.83 an hour for workers aged 18 to 21; and
• From £3.53 to £3.57 an hour for workers aged 16 and 17.

Additionally, the adult rate of the minimum wage will be extended to 21-year-old workers from October 2010.

Today's announcement is in line with the recommendations of the Low Pay Commission, whose report was delayed from its initial deadline of 1 February to take account of changing economic circumstances.

Ministers had already announced plans to ban employers from counting tips towards the National Minimum Wage.

A further attempt to shame employers who wilfully disregard the National Minimum Wage was also included in today's announcement, with precise details of the means through which this is to be achieved due to follow later.

Employers had earlier called for the National Minimum Wage to be frozen this year, with the British Chambers of Commerce calling for the rate to be pegged until there was significant improvement in the economy.

Trade unions had warned against freezing the National Minimum Wage, with the TUC arguing that this would mean low-paid workers falling further behind their better-paid colleagues.

Although the majority of employers agree annual pay settlements in the first half of the year, the October increase in the National Minimum Wage rate tends to have a strong influence on those who settle in the second half of the year.

In 2008, the 3.8% increase in the National Minimum Wage also set a median going rate across the rest of the economy during October, November and December.

Today's announcement in full can be found here
Full report of the Low Pay Commission here (5Mb)
More about today's announcement on XpertHR