The Government has announced a major overhaul to the minimum wage that aims to narrow the pay gap for younger workers.
As part of the shake-up, the Low Pay Commission (LPC) – the independent body in charge of calculating the amount – will suggest a wage to the Government that factors in the cost of living, the labour market, the wider economy and expected annual trends in inflation up until 2026.
This change will come into effect in April 2025 and aims to reflect the rise in household bills and food shopping.
The LPC was also instructed to ensure the National Living Wage, the rate for those over 21, does not drop below two-thirds of the UK’s median earnings.
A major beneficiary of the minimum wage changes will be workers aged between 18 and 20 years old. As it stands, the minimum wage for that age group is £8.60 per hour, which is almost £3 less than the £11.44 National Living Wage paid to employees aged over 21.
As of next April, if you’re aged between 18 and 21, you’ll receive a new minimum pay that the Government said “will narrow the gap with the National Living Wage”.
The wage rule changes were last applied in April this year. However, due to the disparity between age groups, 18-20-year-olds were deemed to be £2,400 worse off per year than older workers, according to the Trades Union Congress (TUC).
The Government described the changes as “the first steps” towards achieving a single rate for all adult workers.
‘People have faced the worst of cost-of-living crisis for too long’
Jonathan Reynolds, the business and trade secretary, said: “For too long, working people have faced the worst of the cost-of-living crisis, but this Government is taking bold action to address it and make work pay.
“The new remit to the LPC is the first of many vital steps we will take to support more people to stay in work and improve living standards. Our focus remains on putting more money in working people’s pockets and boosting economic growth.”
Paul Nowak, the TUC’s general secretary, believes the overhaul “will make a difference to millions”.
He added: “We welcome the Government’s decision to ask the Low Pay Commission to be more ambitious next year and into the future.
“We also support the Government’s commitment to ending discriminatory age bands for minimum wage workers. Young people face the same cost-of-living pressures as other adult workers and will welcome their pay being brought into line.”
