In April, over three million people in the UK are set to receive a wage increase as the government implements new legislation. The National Living Wage will rise to £12.21, and the National Minimum Wage will increase to £10.00 per hour. This change, announced during last year’s Budget, represents a 6.7% increase in the National Living Wage, leading to an additional £1,400 per year for full-time workers eligible for the raise. The National Minimum Wage for individuals aged 18 to 20 will also see an increase to £10.00 per hour, resulting in an annual salary boost of £2,500 for those who qualify.
The impact assessment indicates that these adjustments will result in approximately £1.8 billion being distributed to employees over the next six years. Minister of Employment Rights, Justin Madders, highlighted the importance of ensuring that economic growth benefits the working population. He emphasised that the wage increase would not only enhance living standards but also stimulate spending in the economy. Chancellor of the Exchequer, Rachel Reeves, reiterated the government’s commitment to providing a genuine living wage that supports individuals with the rising cost of living.
Deputy Prime Minister, Angela Rayner, expressed the government’s dedication to improving pay for millions of lower-paid workers, particularly young employees and apprentices. The goal is to ensure that work is financially rewarding and enhances living standards nationwide. These wage adjustments also apply to apprentices, with significant increases set to take effect this year. For instance, an 18-year-old apprentice in construction will witness an 18% wage hike, from £6.40 to £7.55 per hour.
The alignment of the National Minimum Wage and the National Living Wage aims to reflect the actual cost of living and inflation, streamlining wage rates for adults. The move signifies a step towards providing fair compensation for all workers, regardless of age. Chair of the Low Pay Commission, Baroness Stroud, underscored the significance of these wage increases in ensuring that work is financially rewarding and sustainable, particularly for low-income individuals. The Commission will engage with employers and employees to gauge the impact of these changes in the coming months.
The Trade Union Congress General Secretary, Paul Nowak, praised the government’s efforts to make work financially viable for all individuals. The increase in the national minimum wage is expected to alleviate financial pressure on low-income earners, with the elimination of outdated and unfair youth rates benefiting young workers across the country. The additional income is anticipated to drive consumer spending, benefiting local economies and workers alike.
CEO of The Chartered Institute of Payroll Professionals (CIPP), Jason Davenport, emphasised the importance of employer compliance with the new wage rates. Davenport highlighted the complexity of compliance issues that employers may face, such as salary sacrifice arrangements. The CIPP is prepared to support employers and payroll professionals in implementing the new rates effectively by offering guidance and resources. The adjustments will come into effect on April 1, 2025, coinciding with a period of robust wage growth, as indicated by recent Office for National Statistics data.
As the wage increase approaches, it is essential for employers to ensure that they understand and correctly implement the new rates to avoid any compliance issues. The government’s focus on providing fair wages for workers and stimulating economic activity through increased spending highlights the commitment to improving living standards across the country. The upcoming wage changes signal a positive shift towards a more equitable and sustainable wage structure that benefits employees of all ages and sectors.