National Minimum Wage

Chapter 5: Setting the Rate
than the personal allowance will benefit by £126 per year. There will also be increases to the
employee and employer Class 1 National Insurance Contribution thresholds.
5.65 Most benefits will be increased in line with CPI from April 2012, although the couple and lone
parent elements of Working Tax Credit will not be uprated. There will also be changes to the
hours criteria for claiming Working Tax Credit. At present a couple with at least one child can
claim Working Tax Credit if they work at least 16 hours a week, but from April 2012 this will
increase to at least 24 hours a week, so those working 16-24 hours a week will lose their
entitlement.
5.66 As a result of changes to taxes and benefits (excluding Housing and Council Tax benefits) a
family with one child, where one person works and earns the minimum wage, will see their
net weekly income for a 35 hour week increase by around £6 to £329 in April 2012. For a
16-24 hour week their net weekly income will fall by £61-72 as a result of the changes to
Working Tax Credit. A single adult with no children working 35 hours a week will see their net
weekly income increase by £3 to £209.
Abolition of the Agricultural Wages Board for England and Wales
5.67 Our remit asked us to consider the implications of the proposed abolition of the Agricultural
Wages Board for England and Wales (AWBEW). We have set out in Chapter 4 the findings
from our commissioned research and also the evidence received from stakeholders. The
timing of abolition is not yet settled but the evidence we have gathered has highlighted areas
where existing AWBEW provisions differ from those under the NMW framework. It is clear
to us that once a date for abolition is agreed, the Government will need to ensure all those
affected are aware of the implications. We will continue to monitor this and will undertake
further research as necessary.
International Comparisons
5.68 As in previous reports we gathered evidence on minimum wage systems in other countries
and in setting the rate considered how the NMW in the UK compared. For consistency, we
have again compared the NMW against the same group of major EU and OECD countries we
have looked at since the NMW was introduced. As we have noted in previous reports,
changes to the relative value of the UK minimum wage depend on how far other countries
have changed their minimum wages and movements in exchange rates and inflation rates.
5.69 In 2011 the comparator group divided between ten countries who made an uprating during
the year and three who did not. The UK was among the former, and the rise in the UK was
higher than the majority, but lower than in Australia, France and Canada. The countries
making no increase in 2011 were the US, Belgium and Ireland (where the wage was reduced
for a brief period and then moved back up to its previous level). However, when we looked at
where these changes placed the current value of the UK minimum wage we found that it
remained in the middle of comparator country wage rates. This was the case whether
exchange rates and purchasing power parities (PPPs) were factored in or when considering
its value relative to median earnings.
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