Around 2.7 million workers across the UK are set to receive a pay rise this week after new statutory minimum wage rates came into force on Wednesday, lifting the National Living Wage for those aged 21 and over from £12.21 to £12.71 an hour.
The 50p increase, which took legal effect on 1 April, follows the government’s acceptance of recommendations from the Low Pay Commission. Ministers say the changes will directly increase pay for about 2.7 million people, with millions more expected to benefit indirectly as employers raise wages slightly above the legal minimum.
For a full-time worker on the new adult rate, the increase is worth about £900 a year before tax, according to the government. A full-time worker aged 18 to 20 on the youth rate is expected to gain about £1,500 a year.
The new rates also increase pay for younger workers and apprentices. The minimum wage for 18 to 20-year-olds has risen from £10.00 to £10.85 an hour, while the rate for 16 to 17-year-olds and the apprentice rate have both gone up from £7.55 to £8.00. The daily accommodation offset has increased from £10.66 to £11.10.
The National Living Wage is the highest statutory minimum wage band and now applies to workers aged 21 and over. The government said the new £12.71 rate keeps the wage floor in line with its aim that it should not fall below two-thirds of median earnings for eligible workers.
Employment Rights Minister Kate Dearden told MPs during a Commons committee debate last month that the minimum wage remained “one of the most successful Government policies in recent decades” and described it as a cornerstone of the government’s plan to “make work pay”.
The increase comes against a backdrop of continued pressure on household finances after several years of high inflation and rising living costs. Supporters of the change say it will give a meaningful boost to low-paid workers, particularly in sectors such as hospitality, retail and social care, where a larger share of employees are paid at or near the legal minimum.
Trade unions welcomed the rise, arguing that higher pay for low earners would help workers meet everyday costs and support spending in local economies. TUC General Secretary Paul Nowak said the above-inflation increase would “make a real difference to the lowest-paid”.
Business groups, however, said the higher wage floor would add to existing cost pressures for employers already dealing with rising taxes and overheads. Hospitality and small business organisations have warned that some firms may respond by raising prices, slowing recruitment, cutting hours or delaying investment.
UKHospitality chief executive Kate Nicholls said many businesses in the sector had reached the limit of what they could absorb and that additional wage costs were likely to be passed on to consumers. The British Chambers of Commerce has also raised concerns about the effect of repeated above-inflation increases on investment and entry-level opportunities for younger workers.
The Low Pay Commission, which advises the government on annual minimum wage rates, has said there is so far no clear evidence of large-scale job losses directly caused by recent increases, although it has noted growing pressure on employers in low-paying sectors and continuing “pay compression” at the bottom of the wage distribution.
Campaigners for the voluntary real Living Wage said the rise was welcome but still left many workers short of what they consider necessary for a decent standard of living. The Living Wage Foundation said its independently calculated rates remain higher, at £13.45 an hour across the UK and £14.80 in London.
Under the law, employers must pay the new minimum rates from 1 April, with underpayment potentially leading to enforcement action. The changes were approved through updated regulations made under the National Minimum Wage Act 1998.
The latest uprating continues a long-running expansion of the wage floor. The National Living Wage was introduced in 2016 for older workers and eligibility has since been widened, most recently to include everyone aged 21 and over.
For workers paid at the legal minimum, the change will be reflected in pay packets from this month, depending on payroll dates. For employers, it marks the start of a new wage bill from the first week of the new financial year.
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