The national minimum wage for adult workers will rise to £5.35 later this year, the government has revealed.
Department of Trade and Industry (DTI) secretary Alan Johnson announced today that approximately 1.3 million workers will see their wages rise by 30p this October, a 6% increase over the current minimum level.
Likewise, the youth rate for workers aged 18 to 21 will also rise, bumped from the current £4.25 to £4.45.
The government has also accepted a recommendation from the Low Pay Commission that the rate for workers aged 16 and 17 should increase from £3.00 to £3.30.
Business groups, however, have expressed concern over the size of the increase.
“We have seen almost double average earnings increases in 2003 and 2004 and another above-average rise last year,” said David Frost, director-general of the British Chambers of Commerce (BCC).
“This rise for 2006, at just below 6%, is well in excess of the likely growth this year. We cannot continue increasing the minimum wage at the pace at which it has increased in recent years.”
Frost predicted that the move could have an adverse effect on employment, particularly as unemployment has risen in recent labour market surveys. Today’s rise could greatly affect some of the UK’s more disadvantaged communities, he said.
However, Johnson assured today’s increase would have no impact on employment levels.
“There is no strong evidence to support the contention that the minimum wage has had any detrimental effect on employment levels in low paying sectors,” the trade chief said.
“It’s right that at a time when our economy is generally strong with the longest ever period of sustained growth and nearly 2.4 million more jobs than 1997, that we continue to help those who get paid the least.”
Further above-average rises, however, may be in doubt, as the Low Pay Commission recommended that future hikes should not exceed average rises in earnings.
