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Rise in minimum wage isn’t new news

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Too many workers have no access to supported training

Chancellor Rishi Sunak confirmed a rise in the National Minimum Wage (NMW) in the autumn budget this week. While the increase was expected, it presents a “double whammy” for employers who are facing this increase at the same next year as the rise in National Insurance.

Richard Maitland, partner at MHA, says the rise is in line with previous annual increases: “The size of the increase to the top rate – the National Living Wage (NLW) – is also around the level we saw prior to the pandemic, although there was a ‘COVID-19 blip’ for the current year when the increase was much smaller.

“To be precise, the increase from April 2020, which had been agreed pre-pandemic, was £0.51 (an hour) and this current proposed increase (April 2022) is £0.59. The rise from April 2021 which did factor in the effect of the pandemic was unusually low, at just £0.19, although at the same time the NLW was extended to 23- and 24-year-olds, whereas previously only those aged 25 and over had been entitled to it.

“For minimum wage employers in sectors such as hospitality, who are very much still feeling the financial pressures of COVID-19, a further increase to their employment costs will be far from welcome.”

An REC spokesperson commented as well: “This rise is a return to the aim of raising the Minimum Wage to two thirds of median average wages by 2024, after a pandemic-inspired slowdown last year. In deciding the rate can get back on path in one year rather than two, the LPC has concluded that the strong pay growth suggested by REC surveys will persist – though this will put pressure on sectors like care and hospitality. The big unanswered question is about progression from lower-paid roles – too many workers are locked out of supported training by the inflexibility of the apprenticeship levy. We need a reformed model, where temporary and flexible workers can do shorter bursts of training that reflect labour market needs and raise their pay.”

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