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States to fall behind minimum wage targets for second year running

States to fall behind minimum wage targets for second year running

Wednesday 15 September 2021

States to fall behind minimum wage targets for second year running


Employment & Social Security is proposing a 35p increase in the current minimum wage.

If agreed by the States, this will increase the adult minimum wage rate from £8.70 to £9.05 per hour, and the young person’s minimum wage rate - which applies to 16 and 17 year olds - from £8.25 to £8.60 per hour.

The Committee has, in recent years, been following a ‘medium-term plan’ for minimum wage rates, to be increased each year until these rates reach 60% of median earnings by 2023. 

After the plan was “paused” at the start of the year due to Covid-19, its implementation has now been pushed back to 2025.

Employment & Social Security’s proposed 4% increase - from 3 January 2022 - is halfway between the latest available RPIX figure of 2.3% and the 5.7% increase that would be required if the medium-term plan were to resume. 

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Pictured: E&SS consulted with representative groups of employers and employees in forming the minimum rates for 2022. 

“The Committee is disappointed that the target date for the minimum wage to equal 60% of median earnings has been put back by a further year,” said its President Peter Roffey.

“But the Committee needs to balance the needs of low-income workers and employers who have had a tough couple of years. The Committee intends to resume the implementation of this plan in 2023. Similarly, efforts to narrow the gap between the young person’s rate and the adult rate will continue when the medium-term plan resumes.” 

The E&SS policy letter – available to read HERE – also details plans to nudge up the offset where accommodation is provided by an employer, from £84 to £87 per week.

Where both accommodation and food are provided, this will increase from £117 to £122. 

These offsets set the maximum amount an employer is permitted to deduct from an employee's wage in compensation for providing accommodation and meals.

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