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Minimum wage to rise by 12p an hour to £6.31 after ministers reject idea of freezing the amount workers must legally be paid

The minimum wage is to rise by 12p an hour to £6.31 for adults from October, Business Secretary Vince Cable announced today.
The rise comes after Downing Street said it was ‘looking at’ cutting or freezing the amount of money workers must legally be paid.
The lower rate for 18 to 20-year-olds will also rise by 5p to £5.03, and by 4p to £3.72 for 16 and 17-year-olds.
However, the rises are almost a third lower than the rate of inflation which tracks the increases in the cost of living.
The new adult rate of £6.31 is equivalent to a rise of 1.9 per cent, while the younger rates are up by one per cent.
But the Consumer Prices Index rate of inflation stood at 2.8 per cent last month.
Ministers accepted the recommendations of the Low Pay Commission, but they rejected the idea of freezing the rate for apprentices. The government instead announced a 3p an increase to £2.68 an hour.
Mr Cable said: ‘The independent Low Pay Commission plays a crucial role in advising the Government when setting the national minimum wage every year. It balances wages of low paid workers against employment prospects if the rate was set too high.’
He added that there was ‘worrying evidence that a significant number of employers’ are not paying apprentices the right minimum wage rate.
 

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Mr Cable said: ‘Apprenticeships are at the heart of our goal to support a stronger economy, and so it is important to continue to make them attractive to young people.
‘Therefore, I am not taking forward the LPC's recommendation to freeze the apprenticeship rate due to non-compliance, but instead am raising it in line with the youth rates. We are working on a series of tough new measures to ensure we tackle non-compliance issues across the board.’

MAKING WORK PAY: WHAT ALL EMPLOYEES MUST RECEIVE BY LAW

From 1 October 2013 the new rates of the National Minimum Wage will be:

Adult rate: £6.31 an hour, up 12p or 1.9%

18-20-year-olds: £5.03, up 5p, 1%

16 and 17-year-olds: £3.72, up 4p, 1%

Apprentice rate: £2.68, up 3p, 1%
Earlier this month Downing Street confirmed a cut or freeze was ‘something we are looking at’ adding: ‘We need to make sure that it’s working.’
Labour and the unions seized on the reports to accuse the government of failing to make work pay. The increases announced today will come into force in October.
TUC general secretary Frances O'Grady said: ‘Boosting the incomes of the low paid goes straight into the economy and wage-led growth must be part of the recovery so we would have liked to have seen minimum wage rates go up further today, even if the Government has rightly rejected calls for a freeze.’
Tim Thomas of the manufacturers' organisation the EEF, commented: ‘Today's announcement strikes a delicate balance between the need for an element of pay progression and the limitations employers face in accommodating pay rises.’
Mr Cable, who last week visited Casemir Chocolate in Enfield to support small businesses, rejected a recommendation to freeze the rate for apprentices
Mr Cable, who last week visited Casemir Chocolate in Enfield to support small businesses, rejected a recommendation to freeze the rate for apprentices
Katja Hall, the CBI's chief policy director, added: ‘Pay restraint has been crucial in creating jobs in this tough economic climate.
‘The LPC has struck a careful balance in setting the rates given sluggish growth, particularly in recommending a cautious approach to youth pay.
‘The LPC will need to monitor the impact of raising the adult rate very carefully. Given average earnings this year are already lower than expected, we must make sure the minimum wage doesn't limit jobs in key sectors, by outstripping pay across the rest of the workforce.

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