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Forget the “big freeze”: this year could be the “minimum wage freeze”

You will remember that the minimum wage increased in October last year. And in October the year before that. Not to mention the increase every year since the National Minimum Wage Act 1998 first took effect in April 1999. But this year, 2012, could bring a halt to over a decade of the lowest paid workers in UK looking forward to an October increase in pay. David Cameron is reportedly considering freezing the national minimum wage.
In February each year, the Low Pay Commission provides the government with a report on the national minimum wage which includes its recommendations for any increase to be applied the following October. This year’s report was sent to the government last week. The Department for Business, Innovation and Skills itself has urged the Commission to consider the impact of uprating the national minimum wage for young people, in particular. The concern is that employers are more reluctant to hire due to the consistent increase in the minimum wage, despite the continuing widespread economic difficulties affecting both the government and business alike. With youth unemployment topping one million in recent months, this is and should be a very real concern for the Commission when making their 2012 recommendations.
The British Chamber of Commerce (“BCC”) has also taken a stand. It has repeatedly urged the Low Pay Commission to consider recommending a national minimum wage freeze. As long ago as April 2009, the Director General of the BCC commented that “Freezing the minimum wage until the economy recovers will provide much needed breathing space for hard-pressed employers and will help save jobs.” Three years later and the message from businesses remains the same. Furthermore, the British Retail Consortium last year urged the government to afford businesses 18 months’ notice of any future minimum wage increase.
Of course, there is backlash from the trade unions and Labour shadow ministers at the suggestion of a minimum wage freeze. The TUC pushed for the Low Pay Commission to recommend an increase as in previous years which “at least keeps pace with the growth of prices and earnings across the economy”, whilst rejecting claims that increases in the national minimum wage had contributed to youth unemployment.
The government is expected to make an announcement on the national minimum wage increase over the course of the next two months – watch this space!
For further information regarding the minimum wage and Employment Law please contact Robert Holland.