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Young jobseekers could bear the cost of a National Minimum Wage hike

The Government has announced increases to the National Minimum Wage (NMW) from October this year - but experts predict this could have a detrimental affect on the job opportunities of younger job seekers.

The new rates, which will come into force on 1 October 2010 will be £5.93 per hour for employees aged 21 and over (up from £5.80), £4.92 per hour for 18-20 year olds (currently £4.83) and £3.64 per hour for 16-17 year olds (an increase on the current from the current £3.57).

The Government is also set to introduce an apprentice minimum wage of £2.50 per hour, applicable for apprentices aged under 19 or anyone in the first year of an apprenticeship scheme.

Responding to rises in the various minimum wage rates, Charles Cotton, performance and reward adviser at the CIPD, said: "The Low Pay Commission is a generally sensible body but this year's recommended hike in the NMW looks to have thrown caution to the wind, especially with regard to the youth and new apprenticeship rate.

"It is difficult to see how this increase will help create jobs or offer a boost in training places for unemployed young people. In particular, combining a higher minimum wage with the impending hike in employers' national insurance contributions really would represent a hefty 'tax on jobs'. Pricing young people out of work, while also using taxpayers' money to subsidise a youth jobs guarantee, doesn't make sense.  We'd have hoped for a more joined up approach.

"In our most recent quarterly Labour Market Outlook survey, a high proportion of our members lacked the certainty on economic prospects for the rest of the year to make decisions about their next pay award.  It isn't clear to us what information the LPC have that gives them greater certainty and confidence. 

"As such we fear they're jeopardising the jobs recovery with these increases, which will also create upwards pressure on wages above the minimum wage - further exacerbating the impact on jobs."