National living wage increase brings pay rise for 1.8 million

1 Apr 2019 By Lauren R Brown

But campaigners urge businesses to provide wage that ‘truly covers the cost of living’ as council tax and energy bills also set to increase

Millions of the lowest paid workers will see their wages go up today as the latest increase to the National Minimum Wage (NMW) comes into effect today.

The pay rise, which comes 20 years after the NMW was first introduced, will see 21 to 24-year-olds receive £7.70 an hour (up from £7.38, resulting in an additional £580 over the year for full-time workers) and 18 to 20-year-olds receive £6.15 per hour (up from £5.90, providing an extra £455 per year).

The national living wage, an obligatory minimum wage payable to workers 25 and over introduced in 2016, has also risen by almost 5 per cent to £8.21 per hour, up from £7.83.

The government estimates 1.8 million people are on the national living wage and will benefit from the increase, with another 300,000 seeing an increase in the NMW.

The hospitality and retail sectors, two of the lowest paid, are expected to see 200,000 workers alone receive the pay rise, and across sectors, women are estimated to make up 60 per cent of all beneficiaries.

The government said it was committed to ending low pay, and that today’s increases followed the announcement late last year to overhaul worker’s rights as part of its Good Work Plan. As part of these changes, from 6 April all workers – including casual and those on zero-hours contracts – will have the right to receive a payslip.

Chancellor Philip Hammond said: “This government is dedicated to increasing the wages of the lowest paid, which is why we introduced the national living wage and have continued to increase the National Minimum Wage rates.”

Business Minister Kelly Tolhurst added that since the national living wage was announced in 2015, it had helped protect the lowest paid by increasing faster than inflation and average earnings. "Our minimum wage rates are among the highest in the world,” she said.

Bryan Sanderson, chair of the Low Pay Commission, an independent body that recommends the rate of the minimum wage, said over the 20 years of the NMW and, more recently, the national living wage, both had achieved their goal of raising pay without significant negative effects on employment.

However, campaigners for a “real living wage” have previously raised concerns the government’s national living wage was not enough, and today said the increased sums still failed to meet rising costs of living.

An analysis of data from the Office of National Statistics by the BBC found council tax increases are set to affect millions, rising on average 4.7 per cent in April, and gas and electricity prices for more than half of British households are going up by approximately £117. NHS prescription charges in England have also risen from £8.90 to £9 – all of which potentially offset the benefits of the pay increase.

Speaking to the BBC, TUC general secretary Frances O'Grady said young workers were still getting “a raw deal on pay”, and has called for the minimum wage to be set at £10 an hour and for 21 to 24-year olds to earn the same amount as those aged 25 and over.

“Their bills are not any cheaper, but they have to make ends meet with less. That is just not fair,” she said.

Katherine Chapman, director of the Living Wage Foundation, which campaigns for a higher minimum wage based on the cost of living, added: "Over 5,000 responsible employers have gone beyond the government minimum and committed to pay a real living wage. We now need to see more businesses step up and provide a wage that truly covers the cost of living."

Last week, Waterstones, which pays both the statutory NMW and national living wage, came under fire for not paying the higher voluntary real living wage set by the Living Wage Foundation after it rejected a petition signed by 1,300 authors calling for it to do so.

The bookseller said doing so would not be “financially viable”, but that it instead focused on increasing its employees’ pay through career progression.

The Low Pay Commission is currently consulting on the NMW and national living wage, and is expected to publish its recommended rates for 2020 later this year.

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