National Minimum Wage

Executive Summary
30 We intend to review the accommodation offset arrangements as part of our 2013 Report,
and have found no reason this year to adjust the offset relative to the minimum wage.
We recommend that the accommodation offset be increased by 9 pence to £4.82 a day
from 1 October 2012.
31 The labour market position of young people has continued to worsen in 2011. Employment
of young people has continued to fall, and unemployment to rise. However, there is debate
about exactly how far pay is a factor. Employment of young people is more sensitive than
that of adults to the economic cycle. With this in mind we reluctantly recommend freezing
the rates for young people, which may increase their relative attractiveness to employers.
Accordingly, we recommend a Youth Development Rate of £4.98 an hour and a 16-17 Year
Old Rate of £3.68 an hour from 1 October 2012.
32 In 2010 we were prudent in our first recommendation for the Apprentice Rate. Last year we
saw some scope to increase it, to £2.60 an hour, while preserving the differential between
it and the 16-17 Year Old Rate. In 2010/11 apprenticeship starts have increased for all age
groups, and we believe there is a room for a further, smaller increase. We recommend that
the Apprentice Rate be increased by 5 pence to £2.65 an hour from 1 October 2012.
We have no presumption in respect of our decision next year, when we expect to have
a larger evidence base which we will review carefully.
33 We have examined a number of ways of indicating what rate recommendations might be
expected in the future. A substantial majority of consultees, from across the spectrum of
employers and workers, opposed these ideas. We agree with them that the disadvantage of
constraining ourselves to positions which by definition cannot be based on timely evidence
outweighs any benefit in increased clarity, particularly in the present uncertain business
environment. On a separate point, stakeholders did indicate strong support for the publication
of our report and the Government’s response as soon as possible.
xv