The Low Pay Commission (LPC) have begun discussions with The Government about the adult rate of National Minimum Wage (Which applies to anyone aged 21 and over). The LPC would like to raise the minimum rate to £6.70 per hour from October 2015 – A 3% increase (an addition of 20p per hour). If this plan goes ahead it will be the largest real-terms increase in the national Minimum Wage since 2007! A raise of 20 pence per hour would mean a significant annual pay raise of £416 for a full-time worker on NMW.
The Facts about National Minimum wage:
- When NVM was first introduced in April 1999, the rate of NMW was £3.60 per hour (£3.00 for 18 to 21-year-olds).
- The NMW is reviewed annually by the Low Pay Commission with any changes made on the 1st October each year.
- The NMW is enforced by HM Revenue and Customs, which requires employers to pay at least the NMW and to keep records to show that this is being done. Failure to do either is a criminal offence and can result in a large fine.
- The rates from 1 October 2014 are: £6.50 per hour for workers aged 21 and over; £5.13 per hour for 18-20 year olds; £3.79 per hour for 16-17 years old.
If the increase is implemented how will this affect everyone?
A big question that has been asked time and time again surrounding the rate of NMW is that wouldn’t raising the minimum wage cause more unemployment and underemployment? How will the small firms that rely on NVM rates cope with the increasing rate?
On the other hand supporters of NMW believe that an increased minimum wage can encourage people to join the workforce and a raise in minimum wage encourages consumption; therefore putting more money back into the economy by allowing low paid workers to spend more.
Until a decision is finalised The Government will study the proposal and make a decision, possibly in next month’s budget, but what are your thoughts about the proposed NMW increase? Good or bad – Let us know.
HRREV Blogger, HR Revolution | HR Outsourcing UK