Rachel Reeves, the Chancellor of the Exchequer, has announced National Living Wage will rise by 6.7 per cent in April 2025.
Hourly rates for more than 3 million workers aged over 21 will increase from £11.44 to £12.21. For someone working full time their pay would rise from £22,368.06 a year to £23,873.60.
Though beneficial for low earners, the increase is smaller in cash terms than the past two years which rose by 9.7 and 9.8 respectively.
Nye Cominetti, Principal Economist at the Resolution Foundation, said: “While large in cash terms, this latest increase is smaller than each of the last two years.”
Cominetti, however, shared their belief that it was a “sensible” decision given that employer National Insurance is expected to rise.
Workers aged 18 to 20 will also see a rise in pay, from £8.60 to £10.00. For those working full time, they would see an overall increase of £2500, from £16,815 to £19,552 a year. This is the largest increase to minimum wage recorded.
In a press release, the treasury explained how this increase is the first step towards combining the National Minimum Wage and National Living Wage “to create a single adult wage rate.”
The minimum wage for apprentices is also rising by 18.0 per cent, from £6.40 and hour to £7.55.
This announcement comes after the government accepted the Low Pay Commission’s (LPC) recommendations to include cost of living in their calculations.
Chair of the LPC, Baroness Philippa Stroud, said in a press release: “These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time.”
These increases are part of the Labour Governments wider to be “pro-business, pro-worker, pro-growth.” This is encapsulated by their Make Work Pay plan, which is already anticipated to raise an additional £600 for the lowest paid workers through the Employment Rights Bill.
Chancellor of the Exchequer Rachel Reeves said: “This Government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.”
Deputy Prime Minister Angela Rayner said: “A proper day’s work deserves a proper day’s pay.”
“Our changes will see a pay boost that will help millions of lower earners to cover the essentials as well as providing the biggest increase for 18–20-year-olds on record.”
Hospitality industry representatives have voiced concerns over the increases.
Kate Nicholls, Chief Executive of UK Hospitality, said: “These wage rises are well above expectations”
“Our companies desperately want to be able to support higher wages for staff but what is being asked of them is simply unsustainable”.
Students at the University of Edinburgh explained to The Student how they felt about the increase.
One student said: “Edinburgh is already so expensive, but this would help make it more affordable, it would help make life easier.”
Another student said: “It might put a strain on hospitality industries which I am worried about. It is hard enough to get shifts already, I don’t want to be squeezed out of my job because they can’t afford to keep me.”
“Rachel Reeves, Keir Starmer and Angela Rayner” by © UK Parliament / Maria Unger is licensed under CC BY 3.0.