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Commission urged to consider economy before setting minimum wage

 

The national minimum wage (NMW) may be frozen in the future if it threatens to stifle economic growth or jobs, according to latest reports.

 

The Government has urged the Low Pay Commission (LPC) – the body which sets the minimum wage – to formally consider the impact of the NMW on ‘employment and the economy’ before approving any future increases.

 

It follows a review of the Commission by the Department for Business Innovation & Skills (BIS), which exposed ‘tension’ between the two parties over ‘strict adherence to the annual remit.’

 

While the Government has previously advised the Commission to consider the wider economy, the LPC’s terms of reference will now be changed to include ‘the understood and accepted goal to raise the wages of the lowest paid without damaging employment or the economy.’

 

The change has fuelled speculation that the NMW may be frozen or indeed cut as a result of the ongoing economic uncertainty.

 

Commenting, a BIS spokesman said: ‘It is important that we have a minimum wage that helps as many low paid workers as possible, while at the same time making sure that we do not damage their employment prospects by setting it too high.’

 

Last year the LPC raised the main rate of the minimum wage from £6.08 to £6.19 for workers aged 21 and over, and increased the apprentice rate from £2.60 to £2.65 per hour.

 

However, the minimum hourly rates for 18-20 and 16-17 year-olds were frozen at £3.68.