Secretary of State at the Department of Trade and Industry (DTI), Stephen Byers, said yesterday that the Government was accepting the recommendation of the Low Pay Commission and increasing the National Minimum Wage to £4.10 and hour from October of 2001.
The rate will rise by a further 10 pence in October 2002 to £4.20 an hour for adult workers although that is dependent upon economic conditions at the time.
The youth rate for the minimum wage, which covers workers between the ages of 18 and 21, is expected to be announced in May, which is currently believed to be after the anticipated date of the general election.
In a comment directed at employers bodies, Mr Byers said that he was confident that the increased hourly rate would not have a detrimental effect on either the economy or employment levels. He went on to say that 70% of workers benefitting from the increase would be women, and that the increase was both significant and would make a “real difference”.
Workers on the current minimum wage of £3.70 an hour and working a 40 hour week can expect a rise of £16 a week.
Commenting on the increase, TUC General Secretary John Monks, said, “This is clearly another significant step towards a decent minimum wage. It will mean a very welcome 11% rise for up to 1.4 million workers. I welcome the government’s decision to implement the Low Pay Commission’s report in full.
“In the longer term we will continue to press for the adult rate to be extended to over 18 year olds and for the minimum wage to do even more to secure justice for the low paid. We look forward to the Low Pay Commission taking further steps towards a fair settlement for Britain’s lowest paid workers.”
The Confederation of British Industry (CBI) said that it accepted the decision to raise the minimum wage to £4.10 an hour from October.
Digby Jones, Director-General, said, “The government has gone as far as it can without moving to a point where the damage outweighs the benefits. It is giving a pay rise of nearly 11 per cent to some 1.3 million low paid workers to help ensure the wage doesn’t wither on the vine.
“But let’s be clear. This increase won’t be easy for some small businesses, which only have a small capacity to absorb extra costs. Most affected will be small businesses in retailing, leisure, textiles, hairdressing, business services and social care.
“That is why we have argued strongly that raising the wage significantly above £4 an hour would be highly damaging. We are pleased the Low Pay Commission, which includes CBI Deputy Director-General John Cridland, took our concerns on board.”