Approximately 2 million of the UK’s lowest-paid workers will receive a raise from Thursday after increases to statutory minimum wage rates. However, many workers are unlikely to feel better off as the pay rise comes on the same day as inflation-busting increases hit household bills.
Workers aged 23-24 are expected be the biggest beneficiaries after the government announced that they will start receiving the new minimum living wage of £8.91 a hour – up from the £8.20 a hour they are currently entitled to.
Previously only workers aged 25 and older received what is now called the national living wage. The increase, a 2.3% rise for 25-year-olds, is worth £345 a year for older full-time employees, according to the government.
The hourly rate for workers aged 18 on the minimum wage will rise by 11p an hour to £6.56, which is a 1.7% increase. The earnings of low-paid colleagues aged 21-22 will rise to £8.36 a hour.
Ministers said the increase meant a full-time worker on the national living wage would be taking home £5,400 more annually than they were in 2010. The move would particularly benefit workers in sectors such as retail, hospitality and cleaning and maintenance, they added.
However, low-paid workers who live in rented accommodation will almost certainly be worse off, as council tax bill increases averaging 4.3% also come into force across England. On the same day, gas and electricity prices for more than half of households are expected to rise by more than 9%, while most of the mobile phone companies and TV and broadband suppliers have put up prices too. The TV licence fee will increase by £1.50 to £159, while English prescription charges will also rise.
The prime minister said: “The national minimum and living wages have increased every year since they were introduced, supporting the lowest paid, and despite the challenges we have faced recently, this year will be no different. That’s why we are providing a well-earned pay rise to 2 million people, which will be a welcome boost to families right across the UK.”
Laura Gardiner, the director of the Living Wage Foundation, which sets the voluntary real living wage rates – currently £10.85 an hour in London and £9.50 outside the capital – said: “The introduction of the national living wage has delivered a solid pay rise to minimum wage workers, and it is welcome to see the government continuing to commit to ambitious increases.
“However, there is still a substantial gap between this wage rate and one based on the cost of living, with national living wage workers falling billions of pounds short of a real living wage over the past five years.”
