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As you may be aware the minimum wage increased this week (yesterday in fact, October 1st) to £5.80 from the £5.73 it was previously. This means that any wages paid out after the 7th will be at the new higher rate. The impact to those of you using Gabem (or any true umbrella company for that matter) will be minimal unless you are using our CIS holiday scheme where you can now expect to save even more money over a year.

The minimum wage increases across the board were:

£5.80 per hour for everyone over the age of 21

£4.82 per hour for 18 - 21 year olds

£3.57 per hour for people under the age of 18 that have completed compulsory education.

The adoption of this tiered payment structure has been criticised quite heavily over the years, and I think you can understand why younger workers might well be irritated at being apparently short changed, but the tiers are there for a reason. The lower rate for younger people gives employers an incentive to take them on, and gets them in to work quickly, hopefully getting them experience (it also lowers the unemployment rate). For a person who may not have completed secondary education, this experience is essential as it can form the basis of a career and give those who start work at 16 something of an advantage sometimes over those who have gone on to university (heated debates often occur when discussing the pros and cons of these two elements of the workforce).

Another recent and significant change to the minimum wage legislation is that dealing with waiting staff. As of yesterday people employing waiting staff have to pay minimum wage regardless of tips. Prior to this change as long as an employer could show that someone waiting on tables had received the minimum wage from working in the restaurant one way or another, they had fulfilled their wage obligations (so long as it was a minimum wage contract).

The national minimum wage in this country is a good balancing act between the needs of businesses and workers. If you think the yearly increase seems small it's worth considering that the minimum wage set in 1997 in the US of $5.15 per hour remained unchanged for 10 years (during which the total inflation rate was around 30%) only reaching $7.25 per hour (around £4.53) just this year.

Hugo
02/10/2009