The Trades Union Congress (TUC) has urged the Low Pay Commission (LPC) to raise the National Minimum Wage (NMW) rates for younger workers.
Young employees are ‘at risk of being left behind’ by the NMW, the TUC warned as it gave evidence to the LPC.
Currently, workers aged between 21 and 24 are entitled to at least £7.05 an hour. The NMW for those aged between 18 and 20 is £5.60, and the minimum wage for employees aged under 18 is £4.05 an hour. Apprentices are currently entitled to at least £3.50 per hour.
The National Living Wage (NLW) applies for workers aged 25 and over, and currently stands at £7.50 an hour. NMW and NLW rates change every April.
The TUC is calling for the LPC to extend the NLW to workers aged 21 and above, and increase the NMW rates for workers aged between 16 and 20.
It has also called for a rise in the apprentice NMW rate.
Commenting on the issue, Frances O’Grady, General Secretary of the TUC, said: ‘Minimum wage rates aren’t increasing fast enough and the government’s target of £9 an hour by 2020 now seems a fantasy.
‘The minimum wage needs a serious boost in the coming years, especially for younger workers.
‘With employment, the economy and earnings set to grow next year, employers will be able to afford a decent rise.’
A survey carried out by the British Chambers of Commerce (BCC) has revealed that four in five businesses in the UK have been affected by rising costs generated as a result of changes to employment legislation.
In its Annual Workforce Survey, which garnered the opinions of more than 1,400 UK businesses, the BCC found that the Apprenticeship Levy, the National Living Wage (NLW) and pensions auto-enrolment have led to an ‘increase in the cost base of businesses’.
50% of respondents surveyed revealed that the NLW has helped to increase their employment costs, whilst 75% of firms reported a rise in costs as a result of compliance with pensions auto-enrolment.
Meanwhile, 20% of businesses have experienced rising costs as a direct result of the introduction of the Apprenticeship Levy.
Rising costs could lead to reduced investment and wage growth opportunities, the BCC warned.
Commenting on the findings, Jane Gratton, Head of Business Environment and Skills at the BCC, said: ‘Businesses are under increasing pressure from the burden of employment costs, and this will influence the choices they make and outcomes for employees.
‘Higher employment costs impact on the bottom line and reduce the resources available to invest in the business and its people.
‘At a time when employers across the country are facing acute skills shortages, it is vital that they have the resources and flexibility to invest in their workforce and the future needs of the business.’
The Federation of Small Businesses (FSB) has called on the government to consider whether forthcoming rises in the National Living Wage (NLW) rate may need to be delayed if the economy cannot bear the pace of change.
By 2020, the NLW will have risen to £8.75 per hour. The business group has suggested that any risk to the UK economy should be ‘built into the next NLW increase’, which is currently scheduled for April 2018.
The NLW should not rise any higher than £7.85 next year, the FSB has suggested.
The call to delay further increases comes following the FSB’s publication of new research, which revealed that 64% of small firms affected by the NLW have taken lower profits in order to meet the latest rate rise.
43% of small businesses have had to increase their wages to meet the demands of the NLW, the research also suggested.
Mike Cherry, National Chairman of the FSB, said: ‘Small employers have demonstrated their resilience in meeting the challenges set by the NLW, with many cutting their margins or even paying themselves less to pay their staff more.
‘In sectors where margins are tight, small firms are resorting to more drastic measures to cope with the NLW.
‘It’s vital that the NLW is set at a level that the economy can afford, without job losses or harming job creation. Cost pressures on small businesses are building, and with most recent economic indicators underperforming, we are now facing the reality that the NLW target may need to be delayed beyond 2020.’
The British Chambers of Commerce (BCC) has called for a rise in the National Living Wage (NLW) to help balance inflationary pressures for low paid workers.
Responding to a call made by the Low Pay Commission (LPC) for comments in regards to minimum wage levels, the BCC recommended a 2.7% increase in the NLW rate, to ‘compensate for the rise in inflation’.
The Consumer Prices Index (CPI) rate of inflation currently stands at 2.9% – its highest level in almost four years.
However, the BCC also stated that many businesses are ‘struggling to absorb the rising cost of employment’, citing pressures from existing policies, such as the Apprenticeship Levy and pensions auto-enrolment. The business group said that any amendment to the NLW rate should be ‘cautious’, in order to prevent further wage bill increases.
Jane Gratton, Head of Business Environment and Skills Policy at the BCC, said: ‘The BCC has recommended an increase in the NLW to help low paid workers manage inflationary pressures which are eroding their spending power.
‘Setting the NLW must be done cautiously, comprehensively taking into account economic circumstances so that people are not priced out of jobs.’
Household incomes in the UK are falling at their fastest rate since 2011, data published by the Office for National Statistics (ONS) has suggested.
Real household disposable income per head fell by 2.0% in the first quarter of 2017 when compared to the same quarter in 2016. This represents the fastest decrease since 2011.
The main reason for the decline was the rise in inflation, the ONS said.
Meanwhile, a separate report published by the Joseph Rowntree Foundation revealed that working families are facing ‘bigger shortfalls in their household budgets’ despite tax cuts and an increase in the National Living Wage (NLW).
The Foundation suggests that this is due to rising living costs, and wage increases being reduced.
Campbell Robb, Chief Executive of the Joseph Rowntree Foundation, commented: ‘Working families are facing bigger holes in their budgets worth hundreds of pounds, despite a higher NLW and tax cuts.
‘It means millions of families are facing a struggle to make ends meet as the cost of getting by in modern Britain rises ever higher.
‘With the Bank of England forecasting inflation will increase even higher this year, families are facing no respite. We need the government to take action and ensure living standards do not fall backwards.’
New National Minimum Wage (NMW) and National Living Wage (NLW) rates are set to come into effect from 1 April.
The NLW, which applies to those aged 25 and over, is set to rise from its current rate of £7.20 to £7.50 an hour, whilst the NMW rate for individuals aged between 21 and 24 will increase to £7.05 from its current rate of £6.95.
Workers aged 18 to 20 will see their hourly rate rise to £5.60 from £5.55, and the rate for those aged under 18 will rise by 5p to £4.05 from £4.00.
Apprentices stand to benefit from a 10p increase from £3.40 to £3.50 per hour.
Commenting on the wage rises, Bryan Sanderson, Chair of the Low Pay Commission (LPC), said: ‘The minimum wage increases on 1 April will bring another year of substantial pay rises for the lowest paid. The minimum wage will cover more workers than ever, and ripple effects mean that the benefits could affect people earning above the minimum as well.’
However, Mr Sanderson acknowledged that businesses may experience added pressure. He stated: ‘Accompanying pay increases, there will inevitably be pressure for employers. These are turbulent times and we will continue to monitor the situation closely.’
From April, the government will align the NMW cycle with that of the NLW. This means that any future NMW increases will occur in April of each year, instead of October.
Average wages for self-employed individuals are lower than they were in 1994/95, a report by the Resolution Foundation has revealed.
Data published by the think tank showed that, whilst the number of self-employed workers has grown by 45% since 2001/02, their weekly earnings have fallen by £60.
The report revealed that self-employed individuals’ typical weekly earnings grew during the late 1990s and early 2000s, but fell in the wake of the financial crisis.
Earnings have recovered over the last year, and, according to the Resolution Foundation, are ‘almost back to levels last seen in the late 1990s at around £240 a week’.
However, this is 15% down when compared to typical weekly earnings in 1994/95.
Adam Corlett, Economic Analyst at the Resolution Foundation, commented: ‘Almost five million workers across Britain are now self-employed. But while the self-employed workforce is getting bigger, typical earnings are actually lower than they were 20 years ago.
‘With so many self-employed workers earning so little, it is right that the Government investigate how public policy should catch up to meet the needs of these workers.’
A Government spokesperson stated: ‘The Government is committed to building an economy that works for everyone and while the National Living Wage has given one million workers a pay rise, the Prime Minister has made clear the labour market must support and protect all workers.’