Minimum wage to jump 3.7%

THE national minimum wage for workers under 25 will reach its highest ever level in October, it has been announced.

Last month, the Westminster government accepted and published recommendations by the Low Pay Commission to increase minimum hourly wage rates to £6.95 for 21-24 year olds (up from £6.75), £5.55 for 18-20 year olds (up from £5.20) and £4.00 for 16-17 year olds (up from £3.87).

A new national living wage of £7.20 for workers aged 25 and over was introduced at the beginning of April .

LPC chair David Norgrove said that establishing a new pay floor for 21-24 year-olds raised important issues of principle. “In reaching a view, we bore in mind that government limited the national living wage to workers aged 25 and over because younger workers are more exposed to the employment risks of a high minimum wage,” he said.

“Critically also, the LPC’s objective for workers under 25 is to recommend rates that should not reduce employment. Our recommended increase balanced these considerations, delivering a higher increase than last year in both cash and percentage terms.

“It means both the real and relative value of the minimum wage for 21-24 year olds is likely to reach its highest ever level.”

The Scottish Grocers Federation said it was extremely concerned about the effect the above-inflation rise would have on retailers.

Head of public affairs for the SGF John Lee said: “With the national living wage coming into force in April, this means that retailers will face two significant rises in staff costs within six months.

“We know from the Scottish Local Shop Report that 78% of staff in Scottish convenience stores are over 24 years of age – so the living wage will have a serious impact which could affect jobs and investment.”

SGF welcomed confirmation in the budget that the Employment Allowance for employers’ national insurance contributions has increased to £3,000 and urged retailers to use it to the full.