The UK government has announced a substantial 9.8% increase in the national minimum wage, raising it to £11.44 per hour from April 2024. This move positions the UK's minimum wage as one of the highest among advanced economies, as a share of average earnings. The announcement was made by Chancellor Jeremy Hunt ahead of the Autumn Statement, signalling a commitment to addressing income inequality and improving the livelihoods of millions of workers.
This increase is set to directly benefit approximately 2.7 million workers, marking a significant step in the government's efforts to uplift low-paid workers. Jeremy Hunt
told the Conservative Party at last month’s annual conference of his intentions to increase the minimum wage to at least £11 pounds an hour, which is part of a goal to raise it to two thirds of average earnings. He noted that the National Living Wage has played a crucial role in reducing the number of people on low pay since 2010.
One noteworthy aspect of this wage hike is the inclusion of workers aged 21 and 22, who will now be entitled to the full minimum wage for the first time. This policy shift is a positive step toward ensuring fair compensation for younger workers, acknowledging the financial challenges they face.
As of now, the National Living Wage in the UK stands at £10.42 per hour for workers aged 23 and over and the minimum wage for 21 and 22-year-olds is set at £10.18. With the proposed increase, a full-time employee aged 23 can expect an annual pay rise of £1,800, while a 21-year-old will see a substantial £2,300 increase per year, representing an approximate 30% boost in their income.
The confirmed raises translate to a 9.8% increase for those aged 23 and over compared to the previous year, showcasing the government's dedication to ensuring that wage growth keeps pace with the cost of living. Workers aged 22 and 21 will experience an even more remarkable 12.4% jump in their minimum wages, reflecting a commitment to improving the financial well-being of younger members of the workforce.
Workers aged 18 to 20 and apprentices will also witness an increase in their minimum wages. Apprentices will experience a significant rise in their hourly rates, jumping from £5.28 to £6.40.
In addition to benefiting individual workers, this policy shift is expected to have positive implications for the broader economy. By addressing income inequality and boosting the purchasing power of low-paid workers, the government aims to contribute to economic stability and growth. However, the decision comes at a time when the Bank of England has expressed concerns about the rapid pace of wage growth - which reached around 8% earlier in the year - posing challenges to returning inflation to its 2% target.
