From the 1st October 2015 the national minimum wage (NMW) changed, as recommended by the Low Pay Commission (LPC) in March 2015.
The government, however, rejected the LPC’s recommendation for the apprentice rate and the new apprentice rate sees a rise of 57p, the largest ever increase in National Minimum Wage for apprenticeships. This higher than recommended rise was set by the government with the belief that apprenticeships will deliver a wage that is comparable to other choices for work – and in turn seeing more people in apprenticeships.
Business Secretary Vince Cable is also planning to launch the National Minimum Wage Accelerator – an online tool which will make it easier to compare rates of pay across regions, sectors and occupations. It will take data from the annual survey of hours and earnings and display information about pay so that people are able to compare wages with others in their sector and region.
So what exactly are the rises going to be? Well, from 1st October 2015 you will have seen:
- the adult rate increase by 20 pence to £6.70 per hour
- the rate for 18 to 20 year olds increase by 17 pence to £5.30 per hour
- the rate for 16 to 17 year olds increase by 8 pence to £3.87 per hour
- the apprentice rate increase by 57 pence to £3.30 per hour
- the accommodation offset increase from the current £5.08 to £5.35
This is the largest real-terms increase in the National Minimum Wage since 2007, and more than 1.4 million of Britain’s lowest-paid workers are set to benefit.
But how will this affect businesses around the UK? A study from the National Institute of Economic and Social Research and Centre For Macroeconomics (yes, that’s quite a mouthful), has suggested that following the previous increases in average labour costs may have been accompanied by increases in labour productivity. Where negative profit effects where found – these tend to be concentrated amongst low-paying SMEs. So will it be the same this time around?
Perhaps you’re at a cross road and unsure whether to employee more staff or outsource some of your business functions? Take a look at our Employing vs Outsourcing Blog and get in touch to arrange a completely free consultation to find out how The Business Hut can assist your business.
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