Minimum wage increase met with criticism

New (KOSDAQ: 160550.KQ - news) minimum wage increases, now in effect, may not be all good news for younger workers , according to a business group.

The national minimum wage for those aged 21 to 24 has risen by 25p an hour to £6.95 - and by the same amount to £5.55 for 18-20-year olds.

The hourly rate for 16 and 17-year-olds rises by 13p to £4 while apprentices, aged under 19, can expect an extra 10p to a minimum £3.40.

It was worth, the Government said, up to £450 more a year per person but the Federation of Small Businesses (FSB) warned rising pay levels in the current economic climate were risking cuts to jobs and hours.

The wage increases took effect 24 hours after a survey for the British Chambers of Commerce showed bosses had already trimmed staff numbers and scaled back hiring in the wake of the introduction of the national living wage in April.

FSB chairman Mike Cherry said: "Small businesses are reacting to difficult economic conditions with characteristic resilience, but they will need more help if increases to the minimum wage are to be a success and not affect employment levels or investment decisions.

"We call on ministers to consider a significant uprating of the Employment Allowance from its current £3,000 level.

"This has already helped to boost pay levels and incentivise job creation, and could be the lifeline many smaller firms need due to fast-rising labour costs."

The TUC also criticised the wage increase - but for different reasons - calling for all workers to receive the national living wage of £7.20 an hour which currently only applies to workers aged 25 and over.

The union organisation's general secretary, Frances O'Grady, said: "Today's increase will be welcome news for young workers, but there is no justification for paying people in their early 20s 25p an hour less than other adults."

Business Secretary Greg Clark said: "The Government promised to create an economy that works for all and today's increase means our lowest paid workers will benefit from their largest pay rise since the recession.

"This will make a real difference to hard-working people up and down the country and means for the vast majority of workers, the national minimum wage is at its highest level in real terms."