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Minimum wage rises this weekend and could breach £11/hour next year

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The minimum wage for workers across the UK will rise by up to 11% from Saturday 1 April, while next year, low paid workers aged 21 and over could earn up to £11.43 an hour.

From tomorrow, the National Living Wage (NLW) will increase by 9.7%, raising the hourly rate by 92p to £10.42 for workers aged 23 and over.

The move was first announced in last year’s Autumn Statement, where the Government said “this is in line with the ambitious target for the NLW to reach two-thirds of median earnings by 2024, and for the age threshold to be lowered to those aged 21 and over”.

This latest pay increase for two million low-paid workers means £1,600 extra in the annual earnings of a full-time employee on the NLW.

National Minimum Wage (NMW) rates for younger workers will also be increased tomorrow:

  • Increasing the rate for 21-22 year olds by 10.9% to £10.18 an hour (£1/hour extra)
  • Increasing the rate for 18-20 year olds by 9.7% to £7.49 an hour (66p/hour extra)
  • Increasing the rate for 16-17 year olds by 9.7% to £5.28 an hour (47p/hour extra)
  • Increasing the apprentice rate by 9.7% to £5.28 an hour (47p/hour extra)
  • Increasing the accommodation offset rate by 4.6% to £9.10 an hour (40p/hour extra). This is an allowable deduction from wages for employer-provided accommodation, applicable for each day of the week.

The Government said the increases follow recommendations made to it by the independent Low Pay Commission (LPC) in the autumn.

It added that the increase to the NLW also helps to “restore most of the real value lost since April 2021” on account of rising inflation.

However, increases in the NMW rates, including the NLW, are not directly influenced by the level of inflation.

Wage rates for 2024 and beyond

The LPC is now consulting on the NMW rates for April 2024 and beyond, with recommendations expected to be made to Government in October.

Meanwhile, it added that for NLW rates to keep on track with the Government’s median earnings target, it estimates this rate will need to rise to between £10.90 and £11.43 next year.

The LPC wrote: “Estimating the forward path of the NLW is very challenging as earnings growth is difficult to measure and predict in the current economic climate. Our central estimate of the on-course rate of the NLW for 2024 is £11.16, within a range of £10.90 to £11.43.”

It added it “remains committed” to lowering the NLW age threshold to 21 years of age in 2024.

Bryan Sanderson, chair of the Low Pay Commission, said: “From April, millions of workers will benefit from these increases to the NMW and NLW. Despite turbulent economic conditions, the labour market has remained strong and unemployment is low.

“We remain confident that this increase is unlikely to have a detrimental impact. Indeed, the high levels of inflation are felt more acutely by those on low pay who spend a higher proportion of their income on energy and food.”

It is important to note that the NLW is different from the UK Living Wage and the London Living Wage calculated by the Living Wage Foundation. The latter are voluntary pay benchmarks that employers can sign up to if they wish, rather than legally binding requirements.

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