National minimum wage 2012/2013: Rates for younger workers 'most likely to be frozen', says Telegraph

The national minimum wage adult rate could be increased with effect from 1 October 2012, but the rates paid to younger workers are "most likely to be frozen" in 2012/2013. This is according to the Daily Telegraph.

The CIPD last year called for the national minimum wage rates paid to younger workers to be frozen in 2012/2013.

National minimum wage rates for younger workers 'most likely to be frozen' in 2012/2013, says Telegraph
Given the current backdrop of ongoing economic uncertainty, rising unemployment and falling inflation, news of the annual increase (or otherwise) to the national minimum wage for 2012/2013 (due to come into effect on Monday 1 October 2012) will be particularly closely watched.

The Telegraph says:

The separate [national] minimum wage rates for young people are the most likely to be frozen to make it easier for firms to offer jobs to one million under-25s who are out of work.

The national minimum wage rate for workers aged 16-17 inclusive is currently set at £3.68 per hour, while the national minimum wage development rate (paid to workers aged 18 to 20 inclusive) is £4.98 per hour and the apprentice rate is £2.60 per hour. See XpertHR's statutory rates pages for full details of the current national minimum wage rates (XpertHR subscription required).

BIS and CIPD favour freezing national minimum wage rates for younger workers
Both the BIS and the CIPD favour freezing national minimum wage rates for younger workers in 2012/2013.

The Telegraph reports that "in its own evidence to the [Low Pay Commission (LPC)], BIS warned that increases in the minimum wage made employers more reluctant to hire." It quotes the BIS submission as follows:

There are [...] reasons to be cautious and moderate in recommending NMW (National Minimum Wage) rates for young people. Evidence suggests that labour market outcomes of younger workers are more at risk from the uprating of the NMW.

In its submission to the LPC late last year, the CIPD called on the LPC to recommend that national minimum wage rates paid to younger workers be frozen in 2012/2013.

In a Twitter discussion with me and @neilmorrison on Monday 3 October 2011, the CIPD stated that it believes that the "national minimum wage is harming youth employment in some sectors," and should therefore be frozen next year (although it notes that this is "a finely balanced decision").

The CIPD also said (again via Twitter): "we've called for a freeze in past. We support NMW, but with rising unmplyment, temp freeze may be for greater good." The CIPD believes that such a national minimum wage freeze for 2012/2013 should be confined to younger workers. It says that the "adult rate appears to have less overall impact but there are variations by region & sector. So policy focus wld be on the yth rates."

The CIPD argues that it would like to see national minimum wage rates for younger workers frozen until the economy recovers: "The freeze could be absolute or relative, but would last until we see more robust growth."

Access the CIPD's full submission to the LPC here.

When will the national minimum wage rates for 2012/2013 be announced?
So when might we expect the Government to announce the national minimum wage rates for 2012/2013?

The Telegraph reports that "the Government is expected to make an official announcement on this year's rates in the next two months."

The Telegraph says that the LPC delivered its 2012 report - which sets out its recommendations for the 2012/2013 national minimum wage rates - to "Downing Street and the Department for Business, Innovation and Skills (BIS) last week."

It is possible that Chancellor George Osborne will announce the national minimum wage increase in next month's Budget 2012 (which he will deliver on Wednesday 21 March 2012).

UPDATE 1 (Thursday 8 March 2012): National minimum wage rates for younger workers to be frozen in 2012/2013, says Independent
The Independent reports today (Thursday 8 March 2012) that the national minimum wage rates for 2012/2013 will be "announced around the time of the Budget on 21 March." It says that while the national minimum wage adult rate is likely to be increased (possibly by around 2%), rates paid to younger workers look set to be frozen at their current level. According to the Independent:

The national minimum wage for workers aged 20 and under is set to be frozen at less than £5 an hour in an attempt to create more jobs for them, the Government will announce soon. Vince Cable, the Business Secretary, has been persuaded that raising the legal minimum wage for those aged 18 to 20 from the current £4.98 could deter employers from taking people on. [...] The rate for those aged 16 and 17 is likely to remain at £3.68 an hour. Mr Cable is expected to reject employers' calls for the minimum wage for adults to be frozen at its current £6.08 an hour when it is due to be uprated in October. It normally increases in line with average earnings, currently rising at 2%.

UPDATE 2 (Sunday 11 March 2012): Freezing national minimum wage for younger workers will give firms "confidence," says Sunday Times
Sunday Times Economics Editor David Smith argues that Osborne needs to use the Budget 2012 to "encourage private employers to recruit and expand." He says that one measure to achieve this would be through freezing the national minimum wage for younger workers.
In Smith's view:

[T]here is nothing permanent about the higher unemployment we have now. As growth recovers, so employment will strengthen. Unemployment will come down. Does that not argue for a big, employment-generating public spending boost in the March 21 budget? No. There are things the chancellor could do on infrastructure spending, which he is attempting. There is more that could be done to boost housebuilding, as Vince Cable said in his now notorious leaked letter last week. But a short-term boost to public spending to generate jobs, in the knowledge that spending has to come down over the medium-term, would be a feeble, make-work plan, however, and ultimately a cruel deception on the unemployed. It has to be the private sector. If the budget tries anything, it should be to encourage private employers to recruit and expand. There may be tax incentives to assist with that. Not increasing the national minimum wage for young people will help. In the end it has to be about giving firms confidence in the outlook.

See also:

National minimum wage 2012/2013: What can we expect from the October 2012 national minimum wage increase? We look at what might be expected from the national minimum wage increase for 2012/2013. This post will be kept updated as new information emerges on what we might expect from the national minimum wage in 2012/2013.
The national minimum wage: 'A machine to destroy jobs'? "The minimum wage is a machine to destroy jobs." This is according to Prudential Chief Executive Tidjane Thiam, speaking at the World Economic Forum in Davos on Thursday 26 January 2012. Thiam argued that the national minimum wage is a "false social policy" designed to protect workers, but which serves to prevent the unemployed from finding work.
How little are you worth? Pay, the economy and a living wage UK HR blogger Neil Morrison responds to claims from the Institute of Economic Affairs that the national minimum wage might be stifling job creation.
Pay and Work Rights Helpline contact details On the Directgov website. Directgov says: "The Pay and Work Rights Helpline gives confidential help and advice on the NMW and can handle calls in over 100 languages. If you aren't being paid the NMW you can contact the Pay and Work Rights helpline or use the online enquiry or complaint form."
Calculating the National Minimum Wage: How to check your pay On the Directgov website. Directgov says: "Almost all workers are entitled to be paid at least the National Minimum Wage (NMW). To check if you are being paid the NMW rate you need to know your pay reference period and what elements of pay count towards the NMW."
National minimum wage: Rates and thresholds for employers Latest info from the HMRC website.
Minimum wage should be scrapped, says IEA's Littlewood The BBC reports.
National Minimum Wage 2011 (XpertHR benchmarking subscription required) The XpertHR benchmarking survey on the national minimum wage for 2010/2011. The survey looks at the following: the impact of the national minimum wage; how employers have adjusted to the national minimum wage; and at their views on the statutory pay floor.
International minimum wage update 2011 (Subscription required) Twenty out of 27 EU member states have a national minimum wage. In January 2011, according to the latest Eurostat data, monthly minimum wage rates ranged from €1,758 in Luxembourg to €123 in Bulgaria - more than a 14-fold difference. At €1,139, the UK's minimum wage was the EU's sixth highest.
National minimum wage (Subscription required) From XpertHR's statutory rates service.
Low Pay Commission Visit the Low Pay Commission (LPC) website for further information on the national minimum wage for 2011/2012, and for previous years.
Low Pay Commission 2011 Report (PDF format, 4.1 MB) Download the 2011 LPC report, which sets out the LPC's complete research and recommendations on the 2011/2012 national minimum wage increase.
The National Minimum Wage rates Complete details of current and future national minimum wage rates from the Directgov website.