The increase in the National Miniumum Wage (NMW) could hit the creation of jobs for young people, according to  Charles Cotton, performance and reward adviser at the Chartered Institute of Personnel and Development (CIPD).

The Chancellor announced that from 1 October, the adult minimum wage rate will increase from £5.80 to £5.93 an hour, the Youth Development Rate will rise from £4.83 to £4.92 an hour and the minimum wage for 16-17-year-olds will increase from £3.57 to £3.64 an hour.

The chair of the Low Pay Commission, David Norgrove, welcomed the move. “The UK economy is on track for recovery, but the speed and strength of that recovery are unclear.  We have recommended an increase in the adult rate of the NMW that balances the needs of workers against the challenges that remain for businesses.”

But Cotton says: “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.”