
The Chancellor, Jeremy Hunt, has announced that the national living wage, which benefits approximately two million workers over the age of 23, will likely increase to above £11 by the coming April. Currently sitting at £10.42 per hour, the minimum wage, also known as the National Living Wage, is adjusted every April and varies based on the age of the employee.
To provide a breakdown, April 2023 will see the National Living Wage for those 23 and older set at £10.42 per hour, the National Minimum Wage for individuals aged 21-22 at £10.18, £7.49 for those aged 18-20, and £5.28 for under-18s. Apprentices, which comprise those under 19 years old or individuals over 19 in their first apprenticeship year, will also earn at the £5.28 rate.
According to the Chancellor’s announcement at the Manchester Conservative Party conference, the minimum wage is projected to rise to at least £11 per hour from April 2024. The government has confirmed that this increase will boost the annual earnings of a full-time worker on the national living wage by £1,000.
Additionally, employers are required by law to pay the minimum wage. In cases where employers skimp on their obligations, they face fines levied by the UK tax authority, HMRC. This affects a wide range of sectors including retail, care, and hospitality.
The setting of minimum wage rates is an annual process steered by the government, based on the counsel of the independent advisory group, the Low Pay Commission. The commission’s recommendations take into account the number of employed individuals, variations in earnings, and the cost of essential items such as food and housing.
However, note that not everyone qualifies for the minimum wage. The self-employed, company directors, volunteers, members of the armed forces, and those living and working in a religious community are excluded. Work undertaken by prisoners, set at a minimum of £4 a week, and academic placements for students lasting less than one academic year are also exempted from falling under the minimum wage mandate.
The law which introduced the minimum wage was passed by the Labour government in 1998, with an initial set rate of £3.60 for the 22 and over age group, and £3 for 18-21 year-olds. Contrary to the initial fear of job losses due to the introduction of the minimum wage, the job market has remained stable with no significant evidence of job losses associated with the implementation of this law.
Furthermore, there is a voluntary “Real Living Wage”, initiated by the Living Wage Foundation charity, currently benefitting over 430,000 workers across the UK. Set at £11.95 per hour in London and £10.90 per hour elsewhere, the Real Living Wage goes beyond the legal minimum reflecting the charity’s belief of what people need to earn to cover everyday needs. There are more than 13,000 Living Wage-accredited employers including tech giant Google, furniture retailer Ikea, financial services provider Aviva, building society Nationwide, and luxury fashion house Burberry.