MILLIONS of workers could see their pay increase from next year as the Government has set out proposals on the new living wage.
The Government has pledged to provide a “genuine” living wage for workers and says it wants to factor the cost of living crisis into decision-making on wages for the country’s lowest-paid workers.
A new update from the Low Pay Commission, which advises the Government on changes to the national minimum wage and national living wage each year, suggests next year could be another inflation-busting wage rise.
It’s estimated the national living wage – which is the minimum most adults can be paid – could increase to £12.71 next year.
However it said predicting the exact figure was difficult so the range could be from £12.55 to £12.86.
The figure currently sits at £12.21 per hour for most adults.
So a rise to £12.71 would equate to a 4% increase – beating the current inflation rate of 3.6%.
If minimum wage rises again, it will come into force in April 2026.
The national minimum wage is the minimum amount of pay per hour that workers are entitled to.
You are eligible to receive the pay rate if you work full-time or part-time.
Meanwhile, the national living wage is the minimum wage for those over 21 and is slightly higher.
The national living wage is set annually and typically rises each spring to keep pace with inflation and the cost of living.
The annual adjustment is made to help keep wages in line with inflation and the cost of living.
The national living wage rose in April this year in a move that was welcomed by lower paid workers.
For most people it was a 6.7% increase – or a boost of £1,400 a year.
The Government has said three million workers benefited from the increase.
Scrapping ‘discriminatory’ age bands
People aged 18 to 20 have a national minimum wage of £10 per hour, while 16 to 17-year-olds can be paid £7.55.
Millions of 18 to 20-year-olds saw a record 16.3% rise in the national minimum wage this year.
This is because the Government is aiming to make things fairer for younger workers by bringing their pay closer to the national minimum wage for older adults.
It says it wants to eventually create a single wage rate for adults and completely scrap “discriminatory” age bands.
The Low Pay Commission has said it will consult with employers, trade unionrs and workers on closing the pay gap between 18 to 20-year-olds and the national living wage.
It’s not clear yet what a single adult rate could look like.
The commission will make its annual recommendations to the Government in October so it’s likely we will get more details then.
An increase to the minimum wage will be a huge boost for lower paid workers – but it could hit businesses hard.
Industries such as hospitality and retail, which employ lower paid workers, say they’ve already seen their costs rise dramatically.
Staff costs in particular have risen because of the minimum wage increase this year and also a rise in the amount of National Insurance contributions employers have to pay.
As a result, some businesses say they’ve had to stop hiring staff or even let workers go.
What if your employer doesn’t pay you the right amount?
If you qualify for national minimum wage or national living wage but your payslip doesn’t reflect this, you should challenge it with your employer.
If this is ineffective, the next step is to file a complaint on the government’s website.
You can do this by visiting the Government website.
Employers who do not pay the minimum wage can be publicly “named and shamed”.
Those who blatantly fail to comply are also at risk of facing criminal prosecution.
When was the minimum wage introduced?
THE first National Minimum Wage was put in place in 1998 by the Labour government.
It originally applied to workers aged 22 and over, and there was a separate rate for those aged 18-21.
A separate rate for 16-17-year-olds was introduced in 2004, and in 2010, 21-year-olds became eligible for the adult rate of the National Minimum Wage.
The rate is set by the Government each year based on recommendations by the Low Pay Commission (LPC).
