From education to employment

Wage boost for millions of low-paid workers

Rishi Sunak Thinking

MILLIONS of the UK’s lowest paid workers will benefit from a pay rise next year, as the government takes further action to help the country’s poorest households.  

The Chancellor is expected to confirm at Wednesday’s Budget and Spending Review that the National Living Wage will increase from £8.91 to £9.50 an hour – a 59p an hour boost which means a full-time worker on the National Living Wage will see a pay rise of more than £1,000 a year.

The National Living Wage was introduced in 2016 and sets the minimum hourly pay a person over the age of 23 can earn when working.

Rishi Sunak is also set to announce a wage rise for young people under the age of 23. For those aged 21-22 the National Minimum Wage rate increases to £9.18 an hour, up from £8.36 – a 82p increase.

With apprenticeships a key part of our Plan for Jobs, the minimum hourly wage for an apprentice will also see a boost next year, with an 18 year old apprentice in an industry like construction seeing their minimum hourly pay increase by nearly 12%, going from £4.30 to £4.81 an hour.

Chancellor of the Exchequer Rishi Sunak said:

“This is a government that is on the side of working people. This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.” 

By introducing these changes, which are broadly consistent with previous increases, the government accepts all recommendations made by the Low Pay Commission – an independent advisory board which brings together economists, employer and employee representatives.

The government remains committed to meeting its ambitious target of a National Living Wage of two-thirds of median earnings and expanding it to include workers over the age of 21 by 2024, provided economic conditions allow.

Since 2010, this government has continuously supported working people on the lowest wages – doubling personal tax thresholds, doubling free childcare for eligible working parents – worth up to £5,000 per child per year. It has also expanded Free School Meals to all five to seven-year-olds – saving families £400 a year.

This builds on recent action to support the lowest earners in the winter months, through measures like the £500 million Household Support Fund to help families with their food and utility costs, the Energy Price Cap, Seasonal Cold Weather Payments, and the Warm Homes Discount to ensure low-income households can keep their homes warm over the winter period.

As we enter the next stage of the Plan for Jobs, an extra £500m will also be invested to give people the skills and support they need to find good work as we build back better from the pandemic.

Sector Response

REC Spokesperson said:

“This rise is a return to the aim of raising the Minimum Wage to two thirds of median average wages by 2024, after a pandemic-inspired slowdown last year. In deciding the rate can get back on path in one year rather than two, the LPC has concluded that the strong pay growth suggested by REC surveys will persist – though this will put pressure on sectors like care and hospitality. The big unanswered question is about progression from lower-paid roles – too many workers are locked out of supported training by the inflexibility of the apprenticeship levy. We need a reformed model, where temporary and flexible workers people can do shorter bursts of training that reflect labour market needs and raise their pay.”

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