Minimum wage to rise 3% to £6.50
Business Secretary Vince Cable today announced that the Government would follow the advice of the Low Pay Commission and implement the above-inflation increase.
The rate for 18 to 20-year-olds will rise by 2%, or 10p, to £5.13 per hour. For those aged 16 and 17, the new rate will be £3.79, representing a rise of 2% or 7p.
Cable said: “The recommendations I have accepted today mean that low-paid workers will enjoy the biggest cash increase in their take home pay since 2008.”
The Federation of Small Businesses tweeted: ”Rise slightly more than we hoped for, but at 1% over inflation most small firms should be able to afford this.”
Restraint welcomed
Association of Licensed Multiple Retailers strategic affairs director Kate Nicholls welcomed the Government's decision to accept the Low Pay Commission's recommendations, rather than the previously discussed increase to £7.
“The decision allows for an increase for employees and crucially avoids imposing additional, unsustainable costs on businesses across the UK," she said.
"We are pleased to see the Commission acknowledge the pressures faced by low-paying sectors in its report and recognising the fact that smaller employers face tighter profit margins than large businesses. Margins across the licensed retailer sector remain tight and the increase in pay will push the margins of affordability for many pubs, clubs and restaurants.
“We saw wages in the hospitality sector rise by more than the CPI rate of inflation last year showing that, when affordable, the industry is prepared to invest in its staff. The moderation shown by the Government will ensure that hospitality businesses are still in a position to do so.
She added: “We share the commission’s ambition to increase the rate but above all we want to see a degree of flexibility and fairness for licensed retail. Accordingly, we are calling on the Government to take into account the totality of income and investment pubs, clubs and restaurants place in their staff and increased labour costs to ensure that salaries remain affordable.”
Challenging
However, Brigid Simmonds, chief executive at the British Beer & Pub Association, expressed concern.
“There’s no doubt that rising costs present challenges for a very highly taxed sector, like the pub industry. The rise reinforces the case for lower taxation, such as action on beer duty and business rates," she said.
“We need to ensure we are protecting jobs in pubs, especially for young people. With the cost of tax and regulation running at £120,000 per pub, we certainly need the Government to focus on reducing the tax burden for pubs.
