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National Minimum Wage to increase for under 25s

Paloma Kubiak
Written By:
Paloma Kubiak

Nearly half a million young people will benefit from an increase to the National Minimum Wage, the Prime Minister has today announced.

David Cameron has revealed plans to increase the National Minimum Wage for those aged under 25 which should see them benefit by an average of £450 per year.

The increase will take effect in October 2016 and includes the following:

  • For those aged 21-24, it will rise by 3.7% to £6.95 an hour
  • For those aged 18-20, it will rise by 4.7% to £5.55 an hour
  • For those aged 16-17, it will rise by 3.4% to £4 an hour
  • Apprentices will see their wages rise by £3% to £3.40 an hour.

The rates have been recommended by the Low Pay Commission which the government has fully accepted this year.

The increase will mean that for the first time, the National Minimum Wage rate for 21-24-year-olds is “restored to its highest level in real terms, higher than its previous peak before the financial crisis”.

The National Living Wage

The new National Minimum Wage should not be confused with the new National Living Wage coming into force from April 2016.

Under the National Living Wage, people aged 25+ will receive £7.20 per hour, a pay rise of £900 a year.

This measure was first announced in the Summer Budget 2015.

From April 2017, the National Living Wage and National Minimum Wage rates will be uprated in parallel.

Voluntary Living Wage

There’s also a third scheme called the Living Wage.

However, this is voluntary scheme which employers can choose to pay, as opposed to the National Minimum Wage and the National Living Wage which are compulsory.

It is calculated according to the basic cost of living in the UK and is currently set at £8.25 an hour in the UK and £9.40 an hour for London.

The voluntary Living Wage is higher than the hourly rate set out for the two compulsory schemes detailed above.