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Government approves new £5.73 Minimum Wage Rate

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/50) issued by The Government News Network on 5 March 2008

Low paid workers can look forward to a fuller pay packet from October, after the Prime Minister today announced the adult National Minimum Wage (NMW) rate will rise from £5.52 to £5.73.

The rate for 18-21 year olds will also increase from £4.60 to £4.77, while the 16-17 year old rate will rise from £3.40 to £3.53.

Nearly one million low paid employees, two thirds of them women, will benefit from the increase.

The Government has also boosted funding for enforcement of the NMW and is planning tough new penalties for rogue employers who underpay staff as part of the Employment Bill, now before the Parliament.

Business Secretary John Hutton said:

"The National Minimum Wage remains one of the most important rights introduced by the Government in the last decade. Before it was introduced, some workers could expect to be paid as little as 35p an hour, our legislation has ensured that can no longer happen.

"I am proud of the minimum wage; it makes a real difference to the lives of many of our lowest-paid workers and protects them from exploitation. It also creates a level playing field for business and boosts the economy."

Since October 2007 the minimum wage for adults, combined with Working Tax credits and other benefits, has guaranteed an income of at least £292 a week for families with one child and one full-time worker.

When the National Minimum Wage was launched the main rate was £3.60. Since then it has increased at substantially more than the rate of inflation, while the number of jobs in the economy has risen by over two million over the same period.

Chairman of the LPC, Paul Myners said:

"This increase means that the minimum wage will have risen by 59 per cent since it was introduced in April 1999 - almost double the expected growth in prices over the same period. Despite many predictions to the contrary, job numbers in the industries most affected by the minimum wage have grown and grown significantly over the same period."

The Government has announced new measures which aim to enforce the minimum wage and crack down on rogue employers. These include:

* A fairer method for dealing with national minimum wage arrears, calculated so that workers do not lose out as a result of underpayment.

* Toughening up penalties for those who break the law, increasing the maximum penalty for non-payment of the NMW to an unlimited fine. The most serious cases of non-compliance will be tried in a crown court.

Since 1999 the Government has helped tens of thousands of workers recover more than £27 million in unpaid wages.

Notes for editors

1. The Low Pay Commission was established following the National Minimum Wage Act 1998 to advise the Government about the National Minimum Wage. It is made up of representatives from all sides of industry. For more details, and copies of the report: see http://www.lowpay.gov.uk/

2. The Government has set the Low Pay Commission's remit for 2008/09. It is asking it to:

* Monitor, evaluate and review the NMW and its impact

* Review the levels of each of the different minimum wage rates and make recommendations for October 2009 and provisional rate recommendations for October 2010

* Review the current apprentice exemptions, bearing in mind the Government's target to increase apprenticeships

* Report to the Prime Minister and Secretary of State for Business, Enterprise and Regulatory Reform by the end of February 2009

3. The LPC makes recommendations to the government in its annual report. This year, the Government has accepted the recommendation that it:

* Reviews the existing guidance on employees sleeping at their place of work

* Updates guidance concerning work experience placements

* Evaluates the fair piece rates arrangement, where home workers are paid on a per item basis

The Government has noted the recommendation that it should take steps to reverse cuts to the sample Annual Survey of Hours and Earnings and prevent further erosion of the data provided by the Office of National Statistics. It has rejected the recommendation that 21 year old workers should be included in the adult rate.

4. The National Minimum Wage, introduced on 1 April 1999, forms part of the Government's overall strategy to establish fairness in the workplace and to make work pay by ensuring that all workers receive at least the hourly minimum rates set.

5. The confidential National Minimum Wage helpline number is 0845 6000 678. The number for Northern Ireland is 0845 6500 207. As well as receiving and investigating complaints about non-payment of the minimum wage, the helpline offers advice and information in more than 100 languages.

6. BERR estimates that just under one million employees stand to benefit from the October 2008 uprating of the National Minimum Wage. This estimate is based on 1p pay bands from the ONS' Annual Survey of Hours and Earnings (ASHE), and takes account of actual and forecast average earnings growth between April 2007 and October 2008.

7.

Table 1. Estimated number of workers that stand to benefit from the October 2008 National Minimum Wage uprating by age and sex

                Male             Female            Total
      16-17           15,000           11,000            25,000
      18-21           52,000           43,000            94,000
      22 and over     259,000          523,000           780,000
      Total           325,000          576,000           900,000 

Source: BERR estimates based on ONS' Annual Survey of Hours and Earnings (ASHE) 2007

Note: These data take account of actual and forecast average earnings growth between the period Spring 2007 and October 2008.

8.

Table 2. Estimated number of workers that stand to benefit from the October 2008 National Minimum Wage uprating by country and government

Country or region                        Beneficiaries
      Wales                                    49,000
      Scotland                                 87,000
      Northern Ireland                         39,000
      England                                  724,000
      North-East                               53,000
      North-West and Merseyside                113,000
      Yorkshire & Humberside                   78,000
      East Midlands                            80,000
      West Midlands                            94,000
      Eastern                                  81,000
      London                                   67,000
      South East                               86,000
      South West                               72,000
      United Kingdom                           900,000 

Source: BERR estimates based on ONS' Annual Survey of Hours and Earnings (ASHE) 2007

Note: These data take account of actual and forecast average earnings growth between the period Spring 2007 and October 2008.

9. The Department for Business Enterprise and Regulatory Reform helps UK business succeed in an increasingly competitive world. It promotes business growth and a strong enterprise economy, leads the better regulation agenda and champions free and fair markets. It is the shareholder in a number of Government-owned assets and it works to secure, clean and competitively priced energy supplies.