Minimum wage raised for under-18s

Sixteen and seventeen year olds will be paid a minimum wage of £3 an hour from October this year, the government has announced today.

At the same time, the adult minimum wage will rise to £4.85 and the rate for 18 to 21 year olds will rise to £4.10.

Trade and Industry Secretary Patricia Hewitt has estimated that increasing the adult rate to £4.85 would benefit around 1.6 million workers. She added that the minimum wage was a "policy to be proud of".

"In the five years since its introduction a million low-paid workers have enjoyed significant increases in their wage packets each and every year," she said.

On the introduction of a minimum rate for under-18s, Ms Hewitt said encouraging young people to stay in full time education or training was the first priority.

"But where young people choose work without training we have a clear duty to protect them from exploitative rates of pay," she said.

The government has also accepted the Low Pay Commission's recommendation to exempt apprentices under the age of 18 from the new young workers rate.

Reacting to today's announcement CBI Deputy Director-General John Cridland said: "The CBI understands why this has been done, but the jury is out on whether it will do more harm than good.

"This is the second successive increase of more than 7%. It means that for the first time the wage is worth more in real terms than it was when introduced in 1999. Consequently, it will bite with more businesses than ever before. So the government has taken a risk with the impact on business and we will be monitoring the outcome extremely carefully."

The CBI said the sectors most affected would be hospitality, retail, business services, social care, textiles, agriculture, leisure and hairdressing.

Mr Cridland warned that a £5-plus minimum wage would be insupportable for employers.

(gmcg)