National Minimum Wage

Chapter 5: Setting the Rate
5.45 Other unions supported the NMW increasing to the level of a living wage in October 2012.
The National Union of Students (NUS) supported an increase to at least £8.20 an hour (a rise
of 35 per cent) and the Public and Commercial Services Union thought that given the weighty
evidence for abolishing low pay and tackling wage and wealth inequalities, the National
Minimum Wage should be raised to at least £8.25 an hour (an increase of 36 per cent).
5.46 In its evidence the Government asked us to concentrate on the effect of a rise in the adult
NMW on employment and inflation. In relation to youth rates (which we consider below) it
said there were extra reasons to be cautious and moderate because of the labour market
difficulties experienced by young workers.
Youth Rates
5.47 As with the adult rate, consultation responses on future levels of the youth rates of the NMW
fell into two camps: those calling for a freeze; and those calling for large increases with a
move to either the adult rate of the NMW, or to a living wage.
5.48 Organisations calling for a freeze included the British Chambers of Commerce (BCC), and
the CBI, who argued that both youth rates of the NMW should be frozen in view of the
challenging employment prospects for young people. While not calling for a freeze, the NFU
argued that the Youth Development Rate should only be raised by half the increase in the
adult rate.
5.49 Save the Children, Platform 51 and NUS were among those wishing to see the same rate for
young people as adults. Trade unions were supportive of an increase in the youth rates of the
minimum wage, with most calling for a single minimum wage to apply to workers of all ages
from the age of 16. The TUC called for the adult rate to apply to all workers from the age of
18, and for the gap between the adult rate and the 16-17 Year Old Rate to be narrowed.
Apprentice Rate
5.50 The Government said that there were important supply and demand issues that needed to be
considered when reviewing the Apprentice Rate. It said that in order to encourage the supply
of apprenticeships, an apprentice wage needs to be set at a level which provides appropriate
incentives for individuals to participate, without dissuading employers from providing
schemes. The Northern Ireland administration pointed out that there were important financial
implications for employers in ensuring that the level of the Apprentice Rate did not deter
them from offering apprenticeships. The Welsh Government said employer costs should not
be unnecessarily increased, but this needed to be balanced so that apprentices were
protected from exploitation without deterring businesses from taking them on. The Scottish
Government had reservations that the level remained too low.
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