Low Pay Commission to investigate link between minimum wage and youth employment, as wage rises are confirmed

The remit of the Low Pay Commission (LPC) has been extended to take into account the impact the national minimum wage (NMW) has on the employment prospects of young people.

The government has today written to the LPC outlining and extending its remit for its 2011 report, which will advise the government on what the NMW should be from October 2011.

As in previous years, the LPC will monitor and evaluate the minimum wage and its impact, but this year it has been asked to pay particular attention to its implications on the competitiveness of small firms and the employment prospects of young people.

The government has also today announced that from 1 October 2010, the NMW will rise by 13p to £5.93 per hour for workers aged 21 and over, and will rise by 9p to £4.92 per hour for 18- to 20-year-olds. Workers aged 16-17 years will receive a minimum wage of £3.64 from October.

This rise in the NMW is a confirmation the new government will honour the rise promised by the former Labour government in their Budget 2010. But the Chartered Institute of Personnel and Development previously warned raising the NMW could price younger workers out of employment.

The government has also introduced an apprentice minimum wage of £2.50 per hour, for the first time, which will apply to all apprentices under 19, or those aged 19 or over who are in the first year of their apprenticeship.

Edward Davey, employment relations minister, said: “The increases to the national minimum wage this year are appropriate for the economic climate. They will strike a balance between helping the lowest paid while at the same time not jeopardising their employment.

“The Low Pay Commission estimates that around 970,000 people stand to benefit from these increases.

“Workers on the national minimum wage are disproportionately likely to be employed by small firms, and so it is right the Low Pay Commission considers their competitiveness when they make their recommendations for next year.”

The LPC will report to prime minister David Cameron and business secretary Vince Cable by the end of February 2011, with their recommendations for October 2011.

Earlier in the month, London mayor Boris Johnson announced the London Living Wage would rise by 25p to £7.85 – but there is no obligation on employers to pay this wage.

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