[UK] Everything you need to know about April’s minimum wage changes

The UK’s National Minimum Wage will rise from April adding an extra 82p to hourly pay. MPs claim the pay increase will add £1,000 annually to the pocket of the average worker, NationalWorld reports.

However, the rise comes as Britons navigate a cost of living crisis that could leave workers paying 7 per cent more for goods from next month and there are concerns that the increase will not be enough to ease the pressure of soaring inflation.

NationalWorld summarises everything you need to know about the National Minimum Wage rise; who it will affect and how much people’s pay will be rising.

The new hourly rates

From 1 April, the hourly rate for people aged 21-22 will rise to £9.18 an hour, up from £8.36.

The National Living Wage for over-23s would increase to £9.50.

The apprentice rate will also rise, from £4.81 an hour to £4.30.

Tory ministers had previously claimed that they would increase the minimum wage to £10.50 an hour and expand the eligibility to over-21s by 2024.

Ministers pledged future rises would be pegged to two-thirds of median earnings; higher than the previous 60 per cent target.

Who is eligible?

• National Living Wage - Apprentices: £4.81 an hour
• 16-17 year-olds: £4.81 an hour
• 18-20 year-olds: £6.83 an hour
• 21-22 year-olds: £9.18 an hour
• 23 and over: £9.50 an hour

The impact of inflation on wages

Recent labour market data demonstrates that wage rises are struggling to keep up with spiralling inflation. Office for National Statistics (ONS) data shows wage growth in the UK is already far behind rising prices.

Between October and December 2021, average weekly pay across Britain fell by -1.2 per cent.

When adjusted for inflation, regular pay fell on the year at -0.8 per cent.

The data shows wages are struggling to keep up with the rising cost of living.

Inflation is expected to increase above 7 per cent in 2022 and the Bank of England warns that it will affect workers.

"These figures confirm working people still face a fragile recovery in the face of a growing cost of living crisis and spiralling inflation," Pat McFadden MP - Labour’s shadow chief secretary to the Treasury - said in response to the data.

Responses to the National Minimum Wage rise

Labour has criticised the government’s plan and said its own minimum wage policies are far better.

Shadow Treasury Secretary Bridget Phillipson said, “This underwhelming offer works out at £1,000 a year less than Labour’s existing plans for a minimum wage of at least £10 per hour for people working full-time.

"Much of it will be swallowed up by the Government’s tax rises, universal credit cuts and failure to get a grip on energy bills.”

Graham Griffiths - director of the Living Wage Foundation - said there was still a "substantial gap" with the real Living Wage.

He said, “The past 18 months has been a perfect storm for workers and families, with costs like fuel and energy rising and cuts to household incomes, so it’s positive to see a significant increase in the minimum wage.

"However, the real Living Wage, unlike the government minimum, is calculated annually based on covering living costs.

"Next month, as part of Living Wage Week, new Living Wage rates will be announced that reflect the rising living costs we’ve all been experiencing.

"These rates will see a substantial gap remain between the real Living Wage and the new government minimum wage.

"If we’re to recover and rebuild over the coming months and years, we’ll need to see more employers commit to go beyond this new government minimum, do the right thing, and commit to pay a real Living Wage," Mr Griffiths said.

The cost of living crisis

Britain’s cost of living crisis is the convergence of surge in prices including higher household bills as well as rising petrol, energy and food costs.

The price rises are poised to get worse this spring following Ofgem’s announcement that it is increasing the energy price cap.

The change will add around £700 on average to annual gas and electricity charges for millions of customers.

Matthew Percival - director for people and skills at the Confederation of British Industry (CBI) - said, "The good news is that the UK economy is continuing to create jobs.

"The bad news is that businesses are struggling to hire and pay is failing to keep up with inflation.

"Bold action is needed to go for growth, with steps to address skills and labour shortages." 

The Bank of England's response

The Bank has increased interest rates to 0.5 per cent in an effort to combat accelerating price growth. But if employees ask for large wage increases to match the cost of living, its task could become more difficult.

Last month, Bank of England governor Andrew Bailey was criticised for suggesting that employers should think twice about giving their staff pay rises.

According to the most recent ONS figures, job vacancies hit a new record high of 1.3 million while unemployment fell to 4.1 per cent, only slightly above pre-pandemic levels.

Source: NationalWorld

(Quotes via original reporting)

The UK’s National Minimum Wage will rise from April adding an extra 82p to hourly pay. MPs claim the pay increase will add £1,000 annually to the pocket of the average worker, NationalWorld reports.

However, the rise comes as Britons navigate a cost of living crisis that could leave workers paying 7 per cent more for goods from next month and there are concerns that the increase will not be enough to ease the pressure of soaring inflation.

NationalWorld summarises everything you need to know about the National Minimum Wage rise; who it will affect and how much people’s pay will be rising.

The new hourly rates

From 1 April, the hourly rate for people aged 21-22 will rise to £9.18 an hour, up from £8.36.

The National Living Wage for over-23s would increase to £9.50.

The apprentice rate will also rise, from £4.81 an hour to £4.30.

Tory ministers had previously claimed that they would increase the minimum wage to £10.50 an hour and expand the eligibility to over-21s by 2024.

Ministers pledged future rises would be pegged to two-thirds of median earnings; higher than the previous 60 per cent target.

Who is eligible?

• National Living Wage - Apprentices: £4.81 an hour
• 16-17 year-olds: £4.81 an hour
• 18-20 year-olds: £6.83 an hour
• 21-22 year-olds: £9.18 an hour
• 23 and over: £9.50 an hour

The impact of inflation on wages

Recent labour market data demonstrates that wage rises are struggling to keep up with spiralling inflation. Office for National Statistics (ONS) data shows wage growth in the UK is already far behind rising prices.

Between October and December 2021, average weekly pay across Britain fell by -1.2 per cent.

When adjusted for inflation, regular pay fell on the year at -0.8 per cent.

The data shows wages are struggling to keep up with the rising cost of living.

Inflation is expected to increase above 7 per cent in 2022 and the Bank of England warns that it will affect workers.

"These figures confirm working people still face a fragile recovery in the face of a growing cost of living crisis and spiralling inflation," Pat McFadden MP - Labour’s shadow chief secretary to the Treasury - said in response to the data.

Responses to the National Minimum Wage rise

Labour has criticised the government’s plan and said its own minimum wage policies are far better.

Shadow Treasury Secretary Bridget Phillipson said, “This underwhelming offer works out at £1,000 a year less than Labour’s existing plans for a minimum wage of at least £10 per hour for people working full-time.

"Much of it will be swallowed up by the Government’s tax rises, universal credit cuts and failure to get a grip on energy bills.”

Graham Griffiths - director of the Living Wage Foundation - said there was still a "substantial gap" with the real Living Wage.

He said, “The past 18 months has been a perfect storm for workers and families, with costs like fuel and energy rising and cuts to household incomes, so it’s positive to see a significant increase in the minimum wage.

"However, the real Living Wage, unlike the government minimum, is calculated annually based on covering living costs.

"Next month, as part of Living Wage Week, new Living Wage rates will be announced that reflect the rising living costs we’ve all been experiencing.

"These rates will see a substantial gap remain between the real Living Wage and the new government minimum wage.

"If we’re to recover and rebuild over the coming months and years, we’ll need to see more employers commit to go beyond this new government minimum, do the right thing, and commit to pay a real Living Wage," Mr Griffiths said.

The cost of living crisis

Britain’s cost of living crisis is the convergence of surge in prices including higher household bills as well as rising petrol, energy and food costs.

The price rises are poised to get worse this spring following Ofgem’s announcement that it is increasing the energy price cap.

The change will add around £700 on average to annual gas and electricity charges for millions of customers.

Matthew Percival - director for people and skills at the Confederation of British Industry (CBI) - said, "The good news is that the UK economy is continuing to create jobs.

"The bad news is that businesses are struggling to hire and pay is failing to keep up with inflation.

"Bold action is needed to go for growth, with steps to address skills and labour shortages." 

The Bank of England's response

The Bank has increased interest rates to 0.5 per cent in an effort to combat accelerating price growth. But if employees ask for large wage increases to match the cost of living, its task could become more difficult.

Last month, Bank of England governor Andrew Bailey was criticised for suggesting that employers should think twice about giving their staff pay rises.

According to the most recent ONS figures, job vacancies hit a new record high of 1.3 million while unemployment fell to 4.1 per cent, only slightly above pre-pandemic levels.

Source: NationalWorld

(Quotes via original reporting)