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3% increase in National Minimum Wage

25 February, 2015

The Low Pay Commission, the body which advises the government on the minimum wage, has recommended an increase to the current National minimum Wage for workers aged 21 and over by 3% from £6.50 to £6.70. The increase, if accepted by the government, would come into effect in October 2015.

ACS chief executive, James Lowman, said: “With inflation running at 0.5% and many prices in store going down, this cost increase will be another challenge for convenience stores particularly for those trying to take on more staff and grow their business.

“While we are concerned at the impact of this increase, we respect the Low Pay Commission’s work in balancing the needs of businesses, staff and the wider economy.”

Commenting on the recommendation, David Norgrove, chair of the LPC, said: “Last year we were pleased to recommend the first real terms increase in the value of the minimum wage since the recession. We argued that the minimum wage had proved its worth over the course of the slowdown, increasing relative to earnings generally and protecting the low paid during the downturn in a way not seen before albeit, as with wages for all other workers, its real value fell.

“Sharp increases in the minimum wage would put jobs at risk – not least bearing in mind pressure on low-paying sectors and small firms. We believe however that the continued recovery, and in particular the impressive growth in employment of the low paid, should this year allow a further increase in the real and relative value of the minimum wage.

“An increase of 3% to £6.70 is a larger real terms increase than last year and, on the basis of the most recent Bank of England inflation forecast, should restore three-quarters of the fall in the real value of the NMW relative to its peak in 2007.

We judge that the improved economic and labour market conditions mean once again that employers will be able to respond in a way that supports employment. However, our recommendation this year is predicated on a forecast which foresees lower costs for business in fuel and energy, a strong economic performance, significant recovery in earnings across the economy and rising productivity. If these expectations are not borne out over the year we will take this into account when considering next year’s recommendation.”

As well as its recommendation for the adult rate, the Low Pay Commission has also recommended:

• an increase of 3.3% to £5.30 in the Youth Development Rate, which applies to 18-20 year olds;

• an increase of 2.2% to £3.87 in the 16-17 Year Old Rate;

• an increase of 2.6% to £2.80 in the Apprentice Rate, which applies to all apprentices in year one of an apprenticeship, and 16-18 year old apprentices in any year of an apprenticeship;

• an increase of 27p in the accommodation offset to £5.35. The offset is the one benefit-in-kind that can count towards the minimum wage. This is the maximum daily sum employers who provide accommodation can deduct towards those costs.





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