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>>Back to Press notice index
Press Release 19 March 2003 LOW-PAID WORKERS TO GET PAY RISE FOLLOWING LOW PAY COMMISSION'S RECOMMENDATIONS Well over a million of the UK's lowest-paid workers will see their wages increase in October, when the adult National Minimum Wage rate will increase from £4.20 to £4.50, and the rate for 18-21 year olds will rise from £3.60 to £3.80. This follows recommendations made in the Low Pay Commission's fourth report, published today. The Government has also provisionally accepted the Commission's recommendations that the rates should be further increased to £4.85 and £4.10 in October 2004, subject to further advice from the Commission in early 2004. Chairman of the Low Pay Commission, Adair Turner, said: "The National Minimum Wage has benefited workers without damaging the economy or employment. We now want to build on its initial success, producing the maximum benefit for low-paid workers which can be achieved without damaging business and employment prospects. We have therefore recommended significant increases in minimum wage rates, above the forecast increase in average earnings. "All the signs are that the minimum wage can be increased without producing damaging economic effects. This implies a series of increases above average earnings over a number of years, gradually increasing the number of people benefiting. But there is also a need for caution in economic circumstances which could prove difficult. We have therefore decided not to recommend the full adjustment to a new level over 2003 and 2004, but propose a partial step towards that end. The upratings which we have recommended for 2003 and 2004 will increase coverage from around one million to 1.7 million jobs. We will consider what further steps are appropriate if asked by the Government to produce a fifth report in early 2005. "As well as looking at new rates, we have made a number of other important recommendations. We are particularly pleased that the Government has said that it will ask us to look at the possible advantages and disadvantages of a minimum wage for 16-17 year olds. We believe that, in principle, there is a case for introducing a minimum wage for this age group. But further work is needed before reaching a final conclusion. We will work closely with Government departments to ensure that wider policy issues are taken into account - particularly the relationship between the minimum wage, education and training policy, and the system of financial support for young people. "While the Government has not accepted our recommendation that 21 year olds should be entitled to the adult minimum wage rate, we are pleased that it has accepted all the remaining recommendations. These will enhance the operation and the enforcement of the minimum wage." Notes to Editors The Low Pay Commission is a statutory body whose role is to advise the Government on the National Minimum Wage. The Commission has produced four reports. These are available from the Stationery Office Bookshops or the Commission’s website at: http://www.lowpay.gov.uk The members of the Low Pay Commission are: Adair Turner (Chairman), Vice Chairman, Merrill Lynch Holdings Ltd; Professor William Brown CBE, Professor of Industrial Relations, University of Cambridge; David Coats, Head, Economic and Social Affairs Department, Trades Union Congress; John Cridland, Deputy Director-General, Confederation of British Industry; Paul Gates OBE, General Secretary, National Union of Knitwear, Footwear and Apperal Trades; Ian Hay OBE, Chairman, Food Trade Association Management; Professor David Metcalf, Professor of Industrial Relations, London School of Economics; Margaret Prosser OBE, Former Deputy General Secretary, Transport and General Workers Union; and Angie Risley, Human Resources Director, Whitbread PLC. The National Minimum Wage for those over 21 is £4.20 per hour. For those aged 18 to 21 or over 21 but in the first six months of a new job with a new employer and receiving accredited training, the rate is £3.60 per hour. The rates are due to rise on 1 October 2003 to £4.50 and £3.80 respectively. Low Pay Commission Elizabeth House 39 York Road London SE1 7NQ Tel. 020 7855 4553 Recommendations made in the Low Pay Commission's Fourth Report National Minimum Wage Rates The adult rate of the minimum wage should be increased to £4.50 in October 2003. The rate should be further increased to £4.85 in October 2004, subject to confirmation by the Commission in early 2004. The Development Rate should be increased to £3.80 in October 2003 and - subject to confirmation nearer the time - to £4.10 in October 2004. These rates should apply to 18-20 year olds and to workers on the older workers' Development Rate. The Government should give the Low Pay Commission a remit to fine-tune the recommended October 2004 upratings of the adult rate and the Development Rate in early 2004, enabling us to consider whether our recommendations remain appropriate in the light of economic circumstances. Young People Twenty-one year olds should receive the adult rate of the National Minimum Wage and the age coverage of the youth Development Rate should be kept under review. The Government should ask the Commission to consider in detail the introduction of a minimum wage rate for 16-17 year olds and to report by February 2004, so that a rate could be introduced by October 2004. Accommodation Offset The level of the accommodation offset should be increased in line with the increase in the adult rate, producing a rate of £24.40 per week in October 2003 and £26.25 per week in October 2004, and the hourly and daily rates should be abolished. Where accommodation is provided for less than the full week, the accommodation offset should be correspondingly reduced. Low Pay Statistics The Government should ensure that the Office for National Statistics devote sufficient attention and resources to achieving the improvements to the low pay statistics identified as necessary in the Review of Distribution of Earnings Statistics, in accordance with the timetable set out in the implementation plan. Awareness The Small Business Service should actively promote and disseminate factual information on the National Minimum Wage that is tailored to small firms. The Government should continue to publicise the minimum wage both to businesses and to workers on an ongoing basis. Publicity should cover the headline rate and the Helpline, with targeted publicity tailored to different groups. Enforcement There should be further proactive enforcement, with greater co-ordination between Inland Revenue and wider Government compliance initiatives, and encouragement of employers' and unions' compliance initiatives. The Government should also evaluate the use of existing powers, and identify whether any changes in practices or powers are needed to strengthen the deterrent to non-compliance. The Government should evaluate the impact on customer service of the action taken to strengthen co-ordination between the Inland Revenue and the Advisory, Conciliation and Arbitration Service. Advice to Businesses Organisations such as the Small Business Service (through its Business Link network) and sectoral trade bodies should be encouraged to continue to provide advice and consider further ways to promote best practice. The Government should further publicise the information and advice services provided by the Advisory, Conciliation and Arbitration Service for businesses to help them manage their response to the minimum wage within the law. Social Care Sector The Government should continue vigorously to promote implementation of the 2001 agreement on commissioning care and should ensure that its impact is carefully monitored. Sleepovers The Government should examine whether the present uncertainty over the treatment of 'sleepovers' can best be resolved through revised guidance, or whether a change to the Regulations is required. Therapeutic Activity The Government should monitor the impact of its revised guidance on the minimum wage and therapeutic activity very closely, in particular whether it helps to reduce uncertainty for those involved in this field, and should ensure that people doing therapeutic activity are not adversely affected by uncertainty about the minimum wage. | |
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