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New minimum wage rates proposed

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Monday 13 September 2021

The Committee for Employment & Social Security is proposing a 35 pence increase in both the adult minimum wage rate and the young person's minimum wage rate from January 2022.

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 in equal increments over the course of five years, until the minimum wage rates reach 60% of median earnings by 2023. The implementation of this plan was paused in 2021 due to the impact of COVID-19 on the economy. Having consulted with representative groups of employers and employees, in the ongoing context of the COVID-19 pandemic and the consequences for the local economy, the Committee recommends that the implementation of the medium-term plan is paused for the second year running.

The Committee is instead proposing increasing the minimum wage and associated rates for 2022 by 4.0%. This is half-way 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 in 2022.

The Committee is of the view that the underlying strategy should remain the same and intends to resume the medium-term plan when the rates are set for 2023. The target date for the minimum wage to equal 60% of median earnings will be extended accordingly to 2025.

Deputy Peter Roffey, President of the Committee for Employment & Social Security, said

"We're grateful to those who took part in our targeted consultation on the proposed changes to the minimum wage rates. We listened to the feedback provided to ensure that, in particular, those on lower incomes, are supported through these challenging economic times.

"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, 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 offset where accommodation is provided by an employer will increase 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.

The Employment Relations Service advises employers to make any required changes to their payroll systems to ensure compliance with the new rates, should the States approve the proposals.

For further advice on the Minimum Wage legislation visit www.gov.gg/employmentrelations, contact the Employment Relations Service on 220026, or email employmentrelations@gov.gg.

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