National Minimum Wage Increases from October 2008 - Government accepts most recommendations of the Low Pay Commission

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13 March 2008

The Low Pay Commission published its 2008 Report in March 2008, making recommendations for increases in rates by 3.8% from October 2008. The proposals are as follows:

National Minimum Wage Rates

the adult rate should be increased from £5.52 to £5.73 an hour
the Youth Development Rate should increase from £4.60 to £4.77 an hour
the 16-17 year-old rate should increase from £3.40 to £3.53 an hour.

Accommodation Offset

the value of the accommodation offset should rise from £4.30 per day to £4.46 per day (equivalent to £31.22 for a 7-day period).

21 Year Olds

21 year olds should be entitled to the adult rate.

Other recommendations include:

a review by the Government of the existing guidance on employees sleeping at their place of work
the production of updated guidance concerning work experience placements
an evaluation of the fair piece rates arrangement, where home workers are paid on a per item basis.

In a separate press release, the Government accepted the recommendations with the specific exception of the recommendation that the adult rate should apply from age 21. Every year the Low Pay Commission makes this recommendation and every year the Government rejects it. This year, the Commission states that it has "again weighed the evidence and concluded unanimously that lowering the entitlement to the adult rate to the age of 21 would not have a detrimental impact on their employment prospects" and notes that most employers already pay 21 year olds at least the adult rate. To apply pressure on the Government, the Commission specifically asks for an explanation of the exact nature of its opposition and a specification of what would need to change for the Government to adopt a positive approach to this recommendation. In this respect, it is perhaps noteworthy that, in its press release, the Government takes credit for having introduced the national minimum wage but does not express any appreciation for the work of the Commission in preparing its recommendations.

The Government has also acknowledged, without any commitment, the Commission's request that steps are taken to reverse cuts to the sample Annual Survey of Hours and Earnings and prevent further erosion of the data provided by the Office of National Statistics.

The Low Pay Commission's remit for 2008/09 has also been set. It is asked to:

monitor, evaluate and review the NMW and its impact
review the levels of each of the different minimum wage rates and make recommendations for October 2009 and provisional rate recommendations for October 2010
review the current apprentice exemptions, bearing in mind the Government's target to increase apprenticeships
report to the Prime Minister and Secretary of State for Business, Enterprise and Regulatory Reform by the end of February 2009.

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Further information:
Low Pay Commission Report 2008
Low Pay Commission Press Release
Government approves new £5.73 Minimum Wage Rate

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