Minimum wage increase comes into force – what it means for 2.7m workers
As both the minimum wage and the real living wage increase in the UK, around 2.7 million workers are expected to get a pay rise this week.
According to the increases announced by the government, workers aged 18 to 20 will increase their wage by 85 pence to £10.85, which means an increase of 8.5 percent. Meanwhile, under-18s and apprentices will receive 45p more, a six per cent increase to £8 an hour.
At the same time, the national living wage for all workers over 21 will rise by 4.1 per cent, from £12.21 to £12.71 per hour.
The significant increase in young workers begins with Labour’s election promise to gradually equalize pay brackets so that these workers are no longer paid less.
The development comes as UK households brace for projected cost of living increases due to the rise in oil and gas prices resulting from the US-Iran war.
Speaking on Wednesday, Sir Keir Starmer said: “In an uncertain and unstable world, it is my government’s duty to protect British people at home and abroad.
“Today, millions of people up and down the country will see their energy bills drop by £117, wages for the lowest paid go up and more support for people who need it most, thanks to government decisions.”
Some hospitality industry bosses reacted negatively to the increases, arguing that they would put more cost pressure on their businesses.
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In a member survey conducted by UK Hospitality together with other trade associations in February, 64 per cent of hospitality businesses said they would cut jobs due to cost increases, including increases in employers’ national insurance contributions.
The rises in the national minimum wage and national living wage highlighted by Sir Keir represent an additional £1.4bn a year for hospitality businesses, the organization said.
The real living wage is also rising this April. This is different from the national living wage, which is the legal minimum wage in the UK. It is calculated based on the cost of basic needs each year and is currently paid by more than half of the companies in the FTSE 100.
Nearly half a million workers on the real living wage will receive a pay rise of up to 85p an hour, or £13.45. This rate is paid voluntarily by 16,000 UK companies.
The 6.7 per cent increase will come into force from today and will add 85p per hour to the discretionary pay rate. For workers in London, this wage will rise by 6.9 per cent, by 95p, to £14.80 an hour.
This year’s increase means a full-time worker earning the real living wage will take home £1,443 more a year than a worker earning the government minimum wage. For London workers this figure will rise to £4,076, according to the Living Wage Foundation, which sets the rates.
Katherine Chapman, chief executive of the Living Wage Foundation, said: “The increase to the minimum wage is a welcome increase for low-paid workers who have been hit hardest by high prices for years. It still falls below the voluntary real living wage, the only wage rate in the UK that is calculated independently of the cost of living.
“Despite tough times for businesses last year, we are still seeing more employers join the movement of more than 16,000 living wage employers who are committed to paying their workers in line with living costs. This is because they know a living wage is good for people, good for society and good for business.”
