National minimum wage 2012/2013: Adult rate increases by 1.8% to £6.19 per hour; younger workers' rates frozen

National minimum wage freeze for younger workers in 2012/2013 is in line with CIPD recommendations
Both the BIS and the CIPD recommended that national minimum wage rates for younger workers be frozen in 2012/2013.

The Telegraph reported last month 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."

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.

National minimum wage rates for 2012/2013: Reactions
Here is a round-up of reactions to the national minimum wage rates for 2012/2013:

• British Chambers of Commerce (BCC) Director General John Longworth is "disappointed" with the increase to the national minimum wage adult rate. He says: "We are disappointed that the government has chosen to raise the adult National Minimum Wage rate by 1.8%, far above our recommendation. While the pressures of inflation are hurting many people, especially the lowest-paid, this decision adds significantly to the cost of doing business, and feeds wage inflation at higher levels. In his Budget on Wednesday, the Chancellor should offset the hike in the National Minimum Wage by scrapping the huge business rate rise which will affect many businesses from April. This rate rise will stop many from employing more people, whether on minimum wage or above." He was, however, more content with the decision to freeze national minimum wage rates for younger workers: "Business has been telling the government for some time that the minimum wage cannot be a one-way bet, particularly when we have over one million young people unemployed. We are pleased that ministers have heeded our call to freeze the youth and development wage rates. Freezing these rates will ensure employers are not put off from employing young people, and give them more confidence to invest in their training."
  
• CBI Chief Policy Director Katja Hall welcomed the "moderate" increase to the national minimum wage adult rate for 2012/2013. She says that the CBI is also pleased that "the LPC also listened to businesses on the youth rates. With youth unemployment at its highest level for a generation, we must take great care not to price young people out of a job. Freezing the minimum wage will help reduce one of the barriers to employers deciding whether or not to take on a young person."

• The TUC says it is "wrong to deny young people an increase in the minimum wage". TUC General Secretary Brendan Barber comments: "The LPC should have been bolder in its recommendations. Even in the current economic climate there was room for an increase in the minimum wage that at the very least kept pace with inflation and earnings. It is wrong to deny young people an increase this year, as there is no evidence that the minimum wage has had an adverse impact on jobs. The reason why firms have not been hiring enough new workers is because they lack confidence in this government's ability to set the UK on course for a sound economic recovery. There is now a real danger that young people will view minimum wage work as exploitative. Many of the businesses that are calling for the minimum wage to be frozen are also complaining about the lack of consumer spending. Boosting demand is vital - but this will not be achieved by squeezing the low paid even further."

UPDATE 1 (Monday 19 March 2012): Youth minimum wage rates frozen for 2012  
Personnel Today's Laura Chamberlain reports. Laura's report includes comment from XpertHR Pay and Benefits Editor Sheila Attwood on the likely impact of this year's national minimum wage rates. She says:

At a time when only a handful of organisations in the private sector are freezing pay, young people in work are likely to be unhappy that their wage rates will not increase this October. For adult workers, the 1.8% increase is likely to be worth less than the average wage increase this year, which XpertHR forecasts at between 2% and 2.5%. It will also be below the level of inflation for 2012.

• The image used on this page was sourced from Wikimedia Commons.

See also:

• National minimum wage (Subscription required) XpertHR's statutory rates service provides full details of the national minimum wage rates for 2012/2013.
• 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.
• 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.