[UK] 6% minimum wage boost for lowest-paid workers

In the UK, more than a million low-paid workers are poised to get a wage hike of around 6 per cent in 2025, under a government pledge to raise the national living wage to £12.10 an hour, Business Matters reports.

Following Labour’s directive to ensure a “genuine living wage,” the Low Pay Commission has outlined plans for the increase and could recommend a higher figure before the upcoming budget.

The national living wage is currently £11.44 an hour. The proposed hike is part of Labour’s commitment to “raise the floor on wages,” according to Deputy Prime Minister Angela Rayner. 

Ms Rayner and Business Secretary Jonathan Reynolds reportedly instructed the Low Pay Commission to ensure that the national living wage aligns with two-thirds of median earnings and reflects the cost of living, emphasising the importance of boosting low earnings during the current economic climate.

The commission’s latest projections suggest that wages should increase by around 5.8 per cent to keep pace with current earnings, significantly more than the earlier forecast of 3.9 per cent made in March. The commission noted that stronger-than-expected earnings growth in 2024 could push the required increase even higher.

Young workers aged 18 to 20 will probably see even larger pay increases, as ministers seek to standardise wages across age groups. Such workers can legally be paid £8.60 an hour currently, however, the commission is moving towards a single adult rate, aligning them with those aged 21 and over.

Responding to the news, Nye Cominetti of the Resolution Foundation reportedly stated that, while the minimum wage has consistently risen above inflation in recent years, the changes under Labour’s new mandate may see even higher increases. Mr Cominetti acknowledged that while the rise is good news for workers, businesses might have hoped for a more modest adjustment but stated that, so far, fears of job losses linked to rising minimum wages have not materialised.

He reportedly warned that as wage levels continue to rise, the risk of negative employment effects grows, necessitating careful consideration by policymakers. “At some point, the trade-offs between higher pay and potential job losses become material,” he said, adding that no clear answer has yet been given regarding the acceptable impact on employment.

A Department for Business and Trade spokesperson said, “We are changing the rules to put more money in working people’s pockets. But we have also been clear we need to consider the businesses who pay these wages, employment prospects, and the impact on the wider economy.”

Source: Business Matters

(Quotes via original reporting)

In the UK, more than a million low-paid workers are poised to get a wage hike of around 6 per cent in 2025, under a government pledge to raise the national living wage to £12.10 an hour, Business Matters reports.

Following Labour’s directive to ensure a “genuine living wage,” the Low Pay Commission has outlined plans for the increase and could recommend a higher figure before the upcoming budget.

The national living wage is currently £11.44 an hour. The proposed hike is part of Labour’s commitment to “raise the floor on wages,” according to Deputy Prime Minister Angela Rayner. 

Ms Rayner and Business Secretary Jonathan Reynolds reportedly instructed the Low Pay Commission to ensure that the national living wage aligns with two-thirds of median earnings and reflects the cost of living, emphasising the importance of boosting low earnings during the current economic climate.

The commission’s latest projections suggest that wages should increase by around 5.8 per cent to keep pace with current earnings, significantly more than the earlier forecast of 3.9 per cent made in March. The commission noted that stronger-than-expected earnings growth in 2024 could push the required increase even higher.

Young workers aged 18 to 20 will probably see even larger pay increases, as ministers seek to standardise wages across age groups. Such workers can legally be paid £8.60 an hour currently, however, the commission is moving towards a single adult rate, aligning them with those aged 21 and over.

Responding to the news, Nye Cominetti of the Resolution Foundation reportedly stated that, while the minimum wage has consistently risen above inflation in recent years, the changes under Labour’s new mandate may see even higher increases. Mr Cominetti acknowledged that while the rise is good news for workers, businesses might have hoped for a more modest adjustment but stated that, so far, fears of job losses linked to rising minimum wages have not materialised.

He reportedly warned that as wage levels continue to rise, the risk of negative employment effects grows, necessitating careful consideration by policymakers. “At some point, the trade-offs between higher pay and potential job losses become material,” he said, adding that no clear answer has yet been given regarding the acceptable impact on employment.

A Department for Business and Trade spokesperson said, “We are changing the rules to put more money in working people’s pockets. But we have also been clear we need to consider the businesses who pay these wages, employment prospects, and the impact on the wider economy.”

Source: Business Matters

(Quotes via original reporting)