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Reaction to decision to freeze minimum wage for under-21s

Here is some reaction to the announcement of changes to the national minimum wage rates from October 2012, recommended by the Low Pay Commission (LPC), and accepted by the government today.

British Retail Consortium

Stephen Robertson, BRC Director General, said:

"The government's made a thoroughly wise decision. As the largest private sector employer, retail recognises its vital role in providing much needed employment. Over 98% of people working for our members are paid more than the minimum wage but this is the right move in the current economic conditions.

"This sensible increase shows appropriate restraint at a time of falling inflation and rising unemployment. 1.8% is within the limits the BRC's evidence showed would allow retailers to create and maintain jobs. Any larger increase would have piled extra pressure on retailers at a time of weak customer demand.

"Freezing the youth rate may make a marginal difference to work opportunities for young people but retailers pay the rate for the job and the vast majority of under 20s working in retail are paid the adult rate."


Katja Hall, CBI Chief Policy Director, said:

“Businesses will welcome the approach taken to this year’s national minimum wage rates. The moderate rise in the adult rate and the freeze in the youth rates will come as a relief to the many hard-pressed firms right across the country.

“Retailers, care homes, hospitality, and other consumer-facing businesses are experiencing particularly tough conditions, so it’s good that the LPC listened to the CBI’s advice and made sure its recommendations preserve jobs and support the fragile recovery.

“The LPC also listened to businesses on the youth rates. With youth unemployment at its highest level for a generation, we must take great care not to price young people out of a job. Freezing the minimum wage will help reduce one of the barriers to employers deciding whether or not to take on a young person.”

GMB union

Paul Kenny, GMB General Secretary, said:

“The proposed increase in the national minimum wage is below the rate of inflation and will lead to a drop in living standards for the lowest paid workers in our economy. It is a missed opportunity to put purchasing power in to the hands of those who will boost consumption.

“Freezing pay for young workers, many of whom work in the profitable retails sector, is a further kick in the teeth from the government that increased tuition fees to £9,000.”

Trades Union Congress

Brendan Barber, TUC General Secretary, said:

“The LPC should have been bolder in its recommendations. Even in the current economic climate there was room for an increase in the minimum wage that at the very least kept pace with inflation and earnings. It is wrong to deny young people an increase this year, as there is no evidence that the minimum wage has had an adverse impact on jobs. The reason why firms have not been hiring enough new workers is because they lack confidence in this government's ability to set the UK on course for a sound economic recovery. There is now a real danger that young people will view minimum wage work as exploitative.

“Many of the businesses that are calling for the minimum wage to be frozen are also complaining about the lack of consumer spending. Boosting demand is vital - but this will not be achieved by squeezing the low paid even further. Low-paid workers, like hairdressers, shop workers and care assistants, tend to spend 100% of any salary increase in their local economy, so a well-judged rise in the minimum wage would have a beneficial effect across the UK.”

Date 19/03/2012

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