Minimum wage increase ‘not enough’ to counter cost of living crisis, experts warn

Employers also urged to audit pay and minimise risk of accidental non-compliance as national living wage rises more than 6 per cent from today

Today’s (1 April) increase in the minimum wage does not go far enough to help employees through the current cost of living crisis, experts have warned.

All minimum wage workers will see their pay rise from today, with the national living wage – the statutory minimum wage for those aged 23 and over – increasing 6.6 per cent to £9.50 an hour, up from £8.91, meaning full-time workers will see their annual take-home pay increase by around £800 per year.

The government has said this is the largest ever uplift of the national living wage, and would help ease the cost of living pressures for low-paid workers.

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“While no government can control the global factors pushing up the cost of everyday essentials, we will absolutely act wherever we can to mitigate rising costs,” said Kwasi Kwarteng, the business secretary.

However, while the pay rise has been widely welcomed, experts have raised concerns that the increase will be eaten up by price rises.

“Many would argue that the increases do not go far enough, to counter soaring inflation and the increased cost of living,” said Joanne Frew, head of employment law at DWF.

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Frew also raised concerns that the cost of living crisis could put employers under increased scrutiny over their minimum wage compliance, and urged minimum wage employers to consider undertaking auditing their books to minimise their risk.

“Many high-profile employers have previously inadvertently fallen foul of the legislation, resulting in substantial penalties and reputational damage,” she cautioned.

Jamie Mackenzie, director at Sodexo Engage, said that while wage increases were certainly welcome, “it may feel like giving with one hand and taking back with the other” against the current backdrop or rising prices.

Mackenzie added that employers also needed to do their part to ease financial pressures. “Our data found that employees can save over £1,600 from benefits alone, showing that discounts in supermarkets or online cashbacks and e-vouchers can go a long way in supporting a workforce that’s feeling the pinch,” he said.

The minimum wage rates for other age groups are also increasing from today. The minimum wage for employees aged 21 to 22 will increase by 9.8 per cent to £9.18 per hour, up from £8.36.

Minimum wage employees aged 18 to 20 will see their pay rise to £6.83, up from £6.56, and those aged under 18 will see a rise from £4.81 an hour, up from £4.62.

Apprentices will also see their minimum wage increase 11.9 per cent to £4.81 an hour, up from £4.30.