Watch: National Living Wage to rise to £9.50 an hour
The UK’s National Living Wage (NLW) is set to increase to £9.50 ($13.10) an hour next year, benefitting millions of the country’s lowest paid workers, aged 23 and over.
From 1 April 2022, wages will rise 6.6%, upon the recommendation of the Low Pay Commission, meaning full-time workers earning the NLW will earn an extra £1,000 a year.
Younger workers aged 21 to 22 will also see the minimum wage rate increase by 82p to £9.18 an hour, while pay for those in apprenticeships will jump from £4.30 to £4.81 an hour.
The government said on Monday that the move builds on its “continued action to support people with the cost of living”, including through the £500m Household Support Fund, Energy Price Cap, Seasonal Cold Weather Payments and Warm Homes Discount.
It also keeps the government on track to meet its target to end low pay by 2024-25, it said.
"This 6.6% rise would continue the trend of above-inflation rises in the National Living Wage, as it moves to its target of two-thirds of median earnings by 2024," Nye Cominetti, senior economist at the Resolution Foundation, said.
"These have already pushed the proportion of employees in low pay to its lowest level in four decades, and helps drive momentum for the prime minister’s plan for a high-wage economy."
The National Living Wage was first introduced in 2016 and sets the minimum hourly pay a person over the age of 23 can earn when working.
In a brief statement it was confirmed that chancellor Rishi Sunak will confirm the wage changes in his budget on Wednesday.
“This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this parliament,” Sunak said.
It comes as the government has faced mounting pressure to help low-paid, and younger workers, who have been hit hardest during the coronavirus pandemic. It also follows a recent removal of the £20-a-week universal credit (UC) uplift.
The government said the rise will help compensate those who are losing out from the UC cut, and have been hit by the effect of inflation on household budgets.
However, there are as many as 4.4 million families who have lost from the cut to UC, compared to 2 million workers on the NLW.
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Campaign group the Living Wage Foundation welcomed the pay rises, but argued that there was still "a substantial gap" between the government-mandated minimum wage and its own calculations of a real Living Wage based on living costs.
Meanwhile, Frances O’Grady, general secretary at the Trades Union Congress (TUC), said: “The government must set its sights higher. We need a £10 minimum wage now, and we need ministers to cancel the cut to universal credit. This increase won’t come into effect until next spring by which time many household budgets will have been hammered by rising bills and the universal credit cut.”
Labour also criticised the move, saying it was not enough. “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,” said Bridget Phillipson, the shadow chief secretary to the Treasury.
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“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.”
The Federation of Small Businesses (FSB) also highlighted that every worker whose pay increases to £9.50 an hour will have to pay taxes of almost £500. It said there needs to be support for the smallest employers in the form of an extension of the small business employment allowance, which covers the first £4,000 of employer national insurance contributions.
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