The national minimum wage (subscription required) increase for 2010/2011 comes into effect from today (Friday 1 October 2010). In addition to the increases to the national minimum wage adult rate, the “youth development rate” and the “youth rate”, a new apprentice rate is introduced for the first time, and the adult rate of the national minimum wage is extended to cover 21 year-old workers (it was previously paid to workers aged 22 and over).
National minimum wage rates for 2010/2011
Here are the full details of the national minimum wage rates for 2010/2011, which will be effective from today (Friday 1 October 2010) until Friday 30 September 2011:
- The national minimum wage adult rate now stands at £5.93 per hour, an increase of 2.2% from its previous level (£5.80 per hour).
- The national minimum wage “youth development rate” (for workers aged 18 to 20) has risen from £4.83 per hour to stand at £4.92 per hour for 2010/2011 (an increase of 1.8%). This increase was based on projected rises in consumer prices index (CPI) inflation, as recommended by the Low Pay Commission (LPC) in its 2010 report.
- The national minimum wage youth rate (for workers aged 16 and 17) has risen from £3.57 per hour to £3.64 per hour (an increase of 1.9%). This increase is also based on CPI forecasts;
- An apprentice minimum wage rate of £2.50 per hour has been introduced. The Low Pay Commission’s (LPC) 2010 report recommended that the apprentice rate be “applied as a single rate to those apprentices currently exempt from the national minimum wage. That is all those under the age of 19 and those aged 19 and over in the first 12 months of their apprenticeship. The wage should cover both those employed on traditional contracts of apprenticeship and employed apprentices on government-supported Level 2 and 3 schemes.”
Impact of the 2010/2011 national minimum wage uprating
The Government has published a detailed assessment of the expected impact on employers (PDF format, 400.7K) (in terms of costs) of the 2010/2011 national minimum wage increase. This is as follows:
The impact on business, charities or voluntary bodies of the increases in the national minimum wage rates is estimated to be £0 million cost. This is because the national minimum wage is not rising faster than average earnings (excluding bonuses) in October 2010. The national minimum wage is now part of employment practices and implementation costs of administering the proposed increase will be minimal. We estimate, however, that the costs to business, charities or voluntary bodies of moving 21 year olds to the adult rate will be around £47.2 million.
The impact on the public sector of the increases in the national minimum wage rates is estimated to be £0 million cost for the reasons set out above. We estimate that around 1.6% of 21 year olds are employed in the public sector and that the costs to the public sector will therefore be around £0.8 million.
As the October 2010 economic commentary from XpertHR Salary Surveys notes, it is is quite possible that the 2.2% national minimum wage uprating for 2010/2011 will provide a much-needed boost to whole economy pay awards in the closing months of 2010.