Young people will see their take home pay fall in October after the Government froze the youth minimum wage rates over concerns that they were hindering job creation.
Vince Cable, the Business Secretary, said it had been a “very hard decision” but the one million under 25s who are out of work would benefit if more jobs are created.
“In these tough times freezing the youth rates has been a very hard decision – but raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run,” he said.
The adult rate rises 1.8pc or 11p an hour to £6.19, while the rates for 18 to 20 year olds stay at £4.98 and those for 16 to 17 year olds remain at £3.68. However, the rate for apprentices jumps 5p to £2.65 an hour.
The Business Department has held concerns over the negative impact of rising labour costs at a time of high unemployment, arguing in its evidence to the Low Pay Commission, the independent body that recommends the minimum wage rates, that the trade off between pay and work should be examined carefully.
“There are also extra reasons to be cautious and moderate in recommending NMW rates for young people,” BIS said.
“Evidence suggests that labour market outcomes of younger workers are more at risk from the uprating of the NMW.”
David Norgrove, the chairman of the LPC, said it was “unanimous” in deciding to freeze the youth rates.
“The commission was again unanimous, despite all the economic uncertainties and the different pressures on low-paid workers and businesses.
We believe we have struck the right balance between the needs of these workers and the challenges faced by employers.”
The British Chambers of Commerce has said aid that the minimum wage should be part of the effort to reinvigorate the economy.
Adam Marshall, director of policy at the BCC has called for a freeze in the youth rate of the minimum wage and a consultation with employers about a gradual reduction in the rate.
However, TUC General Secretary Brendan Barber said: “It is wrong to deny young people an increase this year, as there is no evidence that the minimum wage has had an adverse impact on jobs.
"The reason why firms have not been hiring enough new workers is because they lack confidence in this government’s ability to set the UK on course for a sound economic recovery.
telegraph.co.uk
Vince Cable, the Business Secretary, said it had been a “very hard decision” but the one million under 25s who are out of work would benefit if more jobs are created.
“In these tough times freezing the youth rates has been a very hard decision – but raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run,” he said.
The adult rate rises 1.8pc or 11p an hour to £6.19, while the rates for 18 to 20 year olds stay at £4.98 and those for 16 to 17 year olds remain at £3.68. However, the rate for apprentices jumps 5p to £2.65 an hour.
The Business Department has held concerns over the negative impact of rising labour costs at a time of high unemployment, arguing in its evidence to the Low Pay Commission, the independent body that recommends the minimum wage rates, that the trade off between pay and work should be examined carefully.
“There are also extra reasons to be cautious and moderate in recommending NMW rates for young people,” BIS said.
“Evidence suggests that labour market outcomes of younger workers are more at risk from the uprating of the NMW.”
David Norgrove, the chairman of the LPC, said it was “unanimous” in deciding to freeze the youth rates.
“The commission was again unanimous, despite all the economic uncertainties and the different pressures on low-paid workers and businesses.
We believe we have struck the right balance between the needs of these workers and the challenges faced by employers.”
The British Chambers of Commerce has said aid that the minimum wage should be part of the effort to reinvigorate the economy.
Adam Marshall, director of policy at the BCC has called for a freeze in the youth rate of the minimum wage and a consultation with employers about a gradual reduction in the rate.
However, TUC General Secretary Brendan Barber said: “It is wrong to deny young people an increase this year, as there is no evidence that the minimum wage has had an adverse impact on jobs.
"The reason why firms have not been hiring enough new workers is because they lack confidence in this government’s ability to set the UK on course for a sound economic recovery.
telegraph.co.uk
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