Millions of workers across the United Kingdom are set to receive a significant pay increase, with some salaries rising by up to £1,500 annually. The boost comes as Chancellor Rachel Reeves confirms new rates for the National Living Wage and National Minimum Wage, set to take effect next year.
What Are The New Wage Rates?
The key change sees the National Living Wage for workers aged 21 and over increase by 4.7 per cent to £12.71 per hour. For a full-time worker, this translates to an annual pay rise of approximately £900.
Younger workers will see even larger percentage increases. The rate for 18 to 20-year-olds will jump by 8.5 per cent to £10.85 per hour, giving a full-time worker in this age group an annual boost of £1,500.
Furthermore, the National Minimum Wage for 16 to 17-year-olds and apprentices will rise by 6 per cent to £8 per hour. The government estimates that these changes will benefit a total of 2.7 million younger and older people across the country.
Government and Expert Reaction
Chancellor Rachel Reeves stated that addressing the cost of living remains a top priority. “I know that the cost of living is still the number one issue for working people and that the economy isn’t working well enough for those on the lowest incomes,” she said. “Too many people are still struggling to make ends meet, and that has to change. That’s why today I’m announcing that we will raise the National Living Wage and also the National Minimum Wage, so that those on low incomes are properly rewarded for their hard work.”
She also highlighted the positive impact on youth employment, noting “These changes are going to benefit many young people across our country, getting their first job.”
However, some experts urge caution. Louise Murphy, an economist at the Resolution Foundation, warned, “Government policy has made employers less willing to take on young people. There is a genuine risk that doing another year of very large increases could harm their employment prospects.”
How Does This Compare to the Real Living Wage?
While the government-mandated increase is substantial, it still falls short of the voluntary Real Living Wage. Katherine Chapman, Director of the Living Wage Foundation, commented, “The boost to the legal minimum wage is a really positive move that will ease some of the pressure on low paid workers hit by sharp price rises over the last year. It will still fall short of the voluntary real Living Wage which is the only wage rate based solely on the cost of living.”
The independently calculated Real Living Wage is currently £13.45 per hour across the UK, with a higher rate of £14.80 per hour for London.
This nationwide pay rise represents a significant financial injection for low-income households, offering some relief from the persistent pressures of the cost-of-living crisis.
