Wage hike adds to the challenges

More than three million workers will receive a pay boost after the chancellor confirmed the National Living Wage will increase from £11.44 to £12.21 an hour from April 2025.

The 6.7 per cent rise – which is worth £1,400 a year for an eligible full-time worker – was described by the Labour government as a “significant step” towards delivering its manifesto commitment to make sure “the minimum wage is a genuine living wage”.

The National Minimum Wage for 18 to 20-year-olds will also rise from £8.60 to £10 an hour – the largest increase in the rate on record.

The £1.40 increase will mean full-time younger workers eligible for the rate will see their pay boosted by £2,500 next year.

The minimum hourly wage for an apprentice will also rise next year, with an 18-year-old in an industry like construction seeing their minimum hourly pay increase by 18 per cent, a pay hike from £6.40 to £7.55 an hour.  

While the rises are good news for workers, there is no doubt employers will need to carefully consider affordability when planning their headcount for the year ahead.

Business owners, particularly smaller ones, have voiced concerns over the double impact of higher wage bills and workers’ rights reforms.

The increases also mark the first step towards aligning the National Minimum Wage and National Living Wage to create a single adult wage rate, which would take place over time.

In a statement following the announcement, the government said: “The plan will boost productivity, creating a workforce that is fit and ready to help us deliver our first mission to kickstart economic growth – with good jobs and growth in every part of the country.”

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