Minimum wage to rise to £5.35

The minimum wage will rise by 6% in October to £5.35, the government confirmed yesterday, but it cautioned that the days of big, inflation-beating rises may be over. Trade and industry secretary Alan Johnson said he had accepted the recommendations of the Low Pay Commission, chaired by Lord Turner, in full. This means the youth rate for 18- to 21-year-old workers will rise to £4.45 an hour from £4.25, an increase of 4.7%, and the rate for 16- to 17-year-olds will rise 10% to £3.30 an hour.

Mr Johnson said: "This latest rise in the minimum wage will mean that around 1.3 million workers will get an increase in their pay from October, the majority of whom are low-paid women.

"The commission shares our aim to help the low paid through an increased minimum wage while making sure that we do not damage their employment prospects by setting it too high."

Lord Turner said the minimum wage had been an undoubted success since its introduction in 1999, when it was set at £3.60 an hour. Employment, especially among the low paid, had increased sharply in the past few years, he said.

Mr Johnson acknowledged that the minimum wage may now be "close to the right level" and the government wanted to be careful it did not cost jobs. But he criticised some employers' groups who had warned at the outset that thousands of jobs would be lost.

CBI director general, Sir Digby Jones, said: "The minimum wage jumped 12% between 2003 and 2005 - a rate of increase far in excess of average earnings growth. More and more companies are finding it difficult to absorb the rise so another 6% will be the last thing they need."