The announcement was made by the Business Secretary Vince Cable who said the recommendations of the Low Pay Commission (LPC) would be accepted in full. Cable said the commission, which was established to advise the Government after the National Minimum Wage Act in 1998, had done a good job in difficult times and had struck the right balance between jobs and pay.
“In these tough times freezing the youth rates has been a very hard decision - but raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run," he said.
The announced rates will come into effect on 1 October this year and mean adults will see their minimum wage rise by 11p to £6.19 an hour. The rate for apprentices is also up by 5p to £2.65 an hour. However the rate for under-21s is frozen meaning the minimum someone aged 16-17 years-old can earn is £3.68 an hour. For 18-20 year-olds the rate stays static at £4.98 an hour.
The frozen rates for young people has been criticised by trade unions as they argue the minimum wage does not have an adverse impact on jobs.
Speaking to BigHospitality, Gareth Edwards, education director and a spokesperson for The Springboard Charity, said the freeze was disappointing but welcomed the rise for apprentices.
"The Government needs to do all it can to ease employment opportunities for young people, particularly as hospitality is one sector still employing and looking for young, home grown talent. As the charity that promotes career opportunities and activities that helps youngsters get into the hospitality industry we’re disappointed that the wage band for 16-20 year olds is frozen but pleased that it’s been raised for apprentices and adult," he said.
"It may well be that we see an increase in the number looking for, and taking up, apprenticeships industry but what about 16-20 year olds that just want to enter and work and pick up on many of the fantastic internal training schemes run by hotels? We’ll need to look at the fine detail but it seems that for all the Government rhetoric about youth unemployment that maybe they could have done more for young people," Edwards added.
A spokesman for the British Hospitality Association (BHA) told BigHospitality the move on minimum wages was not a surprise. He pointed out that while wages accounted for around 40 per cent of a restaurant's turnover, payroll costs had to be kept in tight control and many young people in the hospitality industry already earned more than the NMW.
David Norgrove, chair of the LPC, was today reappointed to his position and said the commission believed it had made the best decision possible in the economic climate.
“We welcome the Government's acceptance of our recommendations on the rates for the National Minimum Wage. The Commission was again unanimous, despite all the economic uncertainties and the different pressures on low-paid workers and businesses. We believe we have struck the right balance between the needs of these workers and the challenges faced by employers," he said.
Last month unemployment rose to 2.67m in the three months to December 2011 and 1.04m 16-24 year-olds were unemployed in that period. Commenting on the announced figures, Stephen Kyjak-Lane, general manager of the Lancaster London hotel and the new chairman of the London advisory board of Springboard, said a Government minister for hospitality was needed to bring down unemployment .