NEWS STORY : Government Confirms Increase in Minimum Wage
STORY
The UK government has announced a significant increase to the National Minimum Wage (NMW) set to take effect in April 2025. This move comes amidst a backdrop of rising living costs and aims to provide a much-needed boost to low-paid workers across the country. The headline figure is a 6.7% increase to the National Living Wage (NLW), the rate for those aged 23 and over, bringing it to £12.21 per hour. This translates to a yearly increase of £1,400 for a full-time worker. However, perhaps even more impactful is the substantial rise for younger workers. Those aged 18-20 will see their minimum wage jump by a record 16.3% to £10.00 per hour, a £1.40 increase equating to an extra £2,500 annually for full-time employees.
This decision reflects the government’s commitment to supporting low-income earners and moving towards a “genuine living wage.” It’s also a step towards aligning the minimum wage for all adults, regardless of age, recognising the financial pressures faced by young people. While this increase is welcomed by many, it’s important to acknowledge the potential impact on businesses. Some, particularly SMEs, may struggle to absorb the increased labour costs, potentially leading to job losses or price increases. The government will need to carefully monitor the effects of this policy change to ensure it achieves its intended goals without causing undue economic strain.
Baroness Philippa Stroud, Chair of the Low Pay Commission said:
The Government have been clear about their ambitions for the National Minimum Wage and its importance in supporting workers’ living standards. At the same time, employers have had to deal with the adult rate rising over 20 per cent in two years, and the challenges that has created alongside other pressures to their cost base.
It is our job to balance these considerations, ensuring the NLW provides a fair wage for the lowest-paid workers while taking account of economic factors. These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time.
The data show some signs of employers finding it harder to adapt to minimum wage increases. The tightening of the labour market since the pandemic has unwound, but the overall picture is similar to 2019.The economy is expected to grow over the next year, although productivity growth remains subdued.
We look forward to continuing our work next year as the detail of the Make Work Pay plan is elaborated upon. The NMW is a major part of the Government’s ambitions for the future of the labour market, and it is important that it continues to be informed by the expertise and consensus-building the LPC provides.
