National minimum wage and living wage increased
The government has announced minimum wage rates are to increase next year
Both the minimum wage and the National Living Wage are to increase next year, giving what the the government are calling a pay rise for millions of workers.
Chancellor Rachel Reeves said she had accepted recommendations from the Low Pay Commission so that those on low incomes are “properly rewarded” for their work.
From next April the National Living Wage will rise by 4.1% to £12.71 an hour for eligible workers aged 21 and over.
The Government said that will increase gross annual earnings of a full-time worker on the rate by £900, benefiting around 2.4 million low-paid workers.
The National Minimum Wage rate for 18 to 20-year-olds will increase by 8.5% to £10.85 an hour, narrowing the gap with the National Living Wage.
This will mean an annual earnings increase of £1,500 for a full-time worker, which the Government said marks further progress towards its goal of phasing out 18 to 20 wage bands and establishing a single adult rate.
The National Minimum Wage for 16 to 17-year-olds and those on apprenticeships will increase by 6% to £8 an hour.
Cost of living is the number one issue
The Chancellor said: “I know that the cost of living is still the number one issue for working people and that the economy isn’t working well enough for those on the lowest incomes.
“Too many people are still struggling to make ends meet, and that has to change.
“That’s why today I’m announcing that we will raise the National Living Wage and also the National Minimum Wage, so that those on low incomes are properly rewarded for their hard work.
“These changes are going to benefit many young people across our country, getting their first job.”
The increases will benefit a total of 2.7 million young and older workers, said the Government, adding that by seeking expert and independent advice, it was able to ensure that the right balance is struck between the needs of workers, the affordability for businesses and the opportunities for employment.
Baroness Philippa Stroud, who chairs the Low Pay Commission said: “The recommendations published today are a product of diligent study of the evidence, careful reflection and significant negotiation.
“Our advice balances the Government’s ambitions with the need to protect the economy and labour market, with rates that are fair and realistic.”
The Chancellor said that in tomorrow’s Budget, she will deliver the Government’s mandate for change, adding that she was determined to cut the cost of living for everyone.
Reaction from businesses
Jane Gratton, deputy director of public policy at the British Chambers of Commerce, said: “People are at the heart of every thriving business, and employers want to ensure their workforce is happy, engaged and well paid.
“However, every above-inflation wage increase leads to higher business costs, lower investment and fewer opportunities for individuals. Making employment more expensive risks deepening the jobs crisis among young people.
“There’s a limit to how much additional cost employers can bear without something having to give.
“With unemployment rising, the Government needs to use tomorrow’s Budget to ease cost pressures for business. Crucially, there must be no new tax increases for businesses.”