National Minimum Wage to Rise in October 2014

The Government has just announced that the National Minimum Wage (NMW) is to rise in October 2014.

After a relatively short internal consultation period the government announced that the NMW will rise in October 2014 to £6.50 per hour. This is an increase of £0.19 per hour over the current NMW which is set at £6.31 per hour.

This 19p jump is the first time in six years that the NMW will have been risen as a percentage higher than inflation.

Other NMW rates will also increase as follows:

The rate for 18 to 20-year-olds will go up by 10p to £5.13 an hour, a 2% increase.

The rate for those aged 16 and 17 will rise by 7p to £3.79, also a 2% rise.

Apprentices will earn an extra 5p an hour, taking their wages to at least £2.73.

George Osborne, Chancellor of the Exchequer also announced that he backed the idea of The National Minimum Wage reaching £7 by October 2015.

Rises in the National Minimum Wage mean different things to the two parties affected:

You are currently working in a job on the NMW?

If you are currently working on or around the National Minimum Wage it will mean a much needed pay rise following years of inflation running at a higher rate than the increases in the NMW.

On the flip side it could mean temp jobs or contract jobs are finished as businesses struggling to drag themselves out of recession face higher wage costs. It could also mean fewer permanent jobs are offered as business expansion is slowed to enable adsorption of additional costs associated with the NMW.

Critics of the NMW also conclude that it affects job creation as businesses try to do with what they have rather than take on additional staff.

You run a business and employ people on the NMW?

If you currently employ staff on or around the NMW it will mean an increase in your costs. Not only will the base wages increase by 3% you will also have higher Employers National Insurance bills.

Some business leaders question the National Minimum Wage saying it goes against the natural market economy of supply and demand and the now nearly annual rise in the National Minimum Wage effectively gives a pay rise to employees for no extra productivity whilst the business is being forced into lower and lower prices to stay competitive.

However a motivated and focused work force is a must for successful companies. As the NMW will affect all businesses in the UK, competitiveness should not be affected and in return employees will be more focused on the job in hand.


There is no real answer as to whether the NMW is right or wrong. People working on it will say it is far too low (which is backed up by studies and the proposal of the Living Wage). Companies facing higher wage bills will say it stifles growth and further investment and in the end costs job growth.

Ultimately it is here, and here to stay so whatever camp you are in get ready for October 2014.


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