In a move set to impact over three million workers in the UK, the Government has announced a significant pay rise starting in April. The new National Living Wage will increase to £12.21 per hour, while the National Minimum Wage will rise to £10.00 per hour. This increase, initially announced in last year’s Budget, will see eligible full-time workers earning an extra £1,400 per year from the National Living Wage rise alone. Additionally, the National Minimum Wage for 18-20-year-olds will also rise by £1.40 to £10.00 per hour, equating to a potential pay increase of £2,500 annually for those eligible for this rate.
The new legislation laid out by the Government is expected to inject around £1.8 billion into the pockets of workers over the next six years. Employment Rights Minister Justin Madders emphasised the importance of ensuring that economic growth translates into tangible benefits for working individuals. He noted that the pay rise would provide a welcome increase for millions of workers, leading to higher spending in the economy and improved living standards across the country.
Chancellor of the Exchequer Rachel Reeves highlighted the Government’s commitment to delivering a genuine living wage that supports individuals in coping with the rising cost of living. By boosting the pay of millions of workers, the Government aims to create a more robust workforce that can contribute to economic growth effectively. Deputy Prime Minister Angela Rayner emphasised the swift action taken by the Government to raise wages for lower-paid workers who play a crucial role in driving the economy forward.
The National Minimum Wage sets the minimum hourly rate that employers must pay their workers, while the National Living Wage applies to individuals aged 21 and over. This increase marks the first time that the National Living Wage considers the cost of living and inflation, signalling a move towards aligning the National Minimum Wage for 18-20-year-olds and the National Living Wage to establish a single adult wage rate. Additionally, the minimum hourly wage for apprentices will also see a boost this year, with an 18-year-old apprentice in sectors like construction experiencing an 18.0% increase from £6.40 to £7.55 per hour.
Amidst rising inflation, the pay rise in April comes as welcome news for workers across various industries. The latest statistics from the Office for National Statistics have shown that average weekly earnings, after adjusting for inflation, have recorded their fastest year-on-year growth in over three years. Low Pay Commission Chair Baroness Stroud commended the wage increases as significant steps towards ensuring fair compensation for the lowest-paid workers and narrowing the gap for young workers compared to adult rates over time.
Trade unions have praised the Government for delivering on its promise to improve wages and make work more rewarding. The increase in the national minimum wage is expected to make a tangible difference to those struggling to cover basic needs, especially at a time when many are facing financial challenges. With more money in the pockets of workers, there is a potential for increased spending in local economies, which can benefit both employees and businesses.
As the implementation of the new wage rates approaches, organisations like The Chartered Institute of Payroll Professionals are urging employers to prepare for these changes to ensure compliance with the updated rates. With a focus on supporting payroll professionals and employers, these entities are providing guidance and resources to navigate the complexities of implementing the revised wage structure effectively. The overarching goal remains to ensure that workers are paid fairly and in line with the updated wage standards come April 2025.