Biggest increase ever for National Living Wage

The National Living Wage is set for its biggest ever increase in April when it will go up by an average 6.2%.

The rise, affecting 3 million workers, is four times the rate of inflation and will take hourly pay for people over 25 to £8.72 per hour.

Other groupings

The rates for other groupings will also rise:

  • The National Minimum Wage for 21 to 24-year-olds – up 6.5% to £8.20
  • For 18 to 20-year-olds – up 4.9% to £6.45
  • For under-18s – up 4.6% to £4.55
  • For apprentices – up 6.4% to £4.15

Prime Minister Boris Johnson said: “Hard work should always pay. For too long, people haven’t seen the pay rises they deserve.”

Room for more

Professor Arindrajit Dube , an American expert on the subject claims there is still more ‘room for exploring a more ambitious national living wage’.

But not everyone is happy about the news. Craig Davidson of the Federation of Small Businesses (FSB) said ‘an increase of this magnitude’ could mean firms employing less people, cancelling investment plans or considering redundancies.

Danger

He continued: “There’s always a danger of being self-defeating in this space. Wage increases aren’t much good to workers if prices rise, jobs are lost and there’s no impact on productivity because employers are forced to cut back on investing in tech, training and equipment.

“Small firms will need support, especially as there will be a 1.7% increase in business rates in April next year.”

Recommendations

The government has also announced a decision to go ahead with the recommendation of the Low Pay Council to allow workers over 21 to receive the National Living Wage by 2024 by which time it will have reached £10.50 an hour.

But Frances O’Grady, general secretary of the Trades Union Congress, said workers needed a national living wage of more than £10 ‘now, not in four years’ time “This is a long-planned raise, but it’s also long overdue. Workers are still not getting a fair share of the wealth they create. And in-work poverty is soaring as millions of families struggle to make ends meet,” she said.

welcomed

Nye Cominetti of the Resolution Foundation think tank said they broadly welcomed the plan, but it was ‘not risk free’.

He said: “It should be matched by a renewed commitment to swiftly evaluating evidence of the impact of such large and sustained minimum wage rises and acting on that evidence if problems emerge.”