New minimum wage rate is a real terms pay cut, says TUC

Government plans to increase the minimum wage by 1.8 per cent for adult workers and freeze the rate for young workers will result in the lowest paid suffering a real terms pay cut, the TUC said today (Monday).

The TUC said that with inflation running at 2.9 per cent (RPI), around 940,000 people, two-thirds of whom are women, would see a further squeeze on their living standards, with young people being hit the hardest.

Commenting on the new rates, Midlands TUC Regional Secretary Rob Johnston, (pictured, above) said: "While we are pleased that government has rejected the siren calls of some employers to freeze the minimum wage for adult workers and apprentices, these increases are still far below inflation and will leave the lowest paid facing a real terms cut.

"These new rates are a particular blow to younger people who will face the biggest hit on their living standards. There is no evidence that the minimum wage has had an adverse impact on young people's employment so it is hard to see the logic behind their pay freeze.

"Today's rate increases do not do enough to help hard-pressed families.  We need a bolder increase next year otherwise the real incomes of minimum wage workers will continue to fall, along with consumer demand."

National Minimum Wage rates from October 2012 will increase from £6.08 to £6.19 for adults aged 21 and above. The rate for 18 - 20 year-olds will remain at £4.98 and for 16 - 17 year-olds remain at £3.68

Apprentices under the age of 19 and older apprentices in the first year of apprenticeship (other apprentices are eligible for the relevant age-based rate of the NMW) will see a 5p rise from £2.60 an hour to £2.65

1.9

- The Retail Price Index (RPI) is the rate of inflation most commonly used by wage setters

- The new rates apply to the first pay reference period on or after 1 October.