A new pay rise for some of the lowest-paid workers comes into place today.
The new rate means two million employees will receive a raise, but hundreds of thousands on the lowest-paid on furlough at the moment will miss out.
The National Living Wage is increasing by 19p an hour, or 2.2 per cent. It will now be £8.91. A full-time employee will receive the equivalent of an extra £345 a year.
It will also be given to 23 and 24-year-olds for the first time.
For 21-22 year-olds the hourly rate rises to £8.36. For those between 18-20 it’ll be £6.56.
Under-18s and apprentices have a rate rise too but it remains below £5.
The raise means a full-time worker aged over 23 on the National Living Wage will be taking home £5,400 more a year than they were in 2010.
It’s hoped that workers in retail, hospitality and cleaning and maintenance will benefit most. These are some of the sectors hit worst by COVID-19.
This comes as New Zealand also raises minimum wage and increases tax on the rich.
Although, TUC general secretary Frances O’Grady warns: “those expecting a decent pay increase today have been let down by the government’s decision to row back on the full rise they were promised”.
“TUC analysis shows that one in three key workers earn less than £10 an hour. This can make it tough for them to pay bills and put food on the table.”
There are calls for the minimum wage to increase to £10 an hour “to stop millions of working people from living in poverty”.
However, Prime Minister Boris Johnson insists the increase was a “well-earned pay rise”.
Business secretary, Kwasi Kwarteng, said workers should check their pay packet “to ensure they’re getting what they are entitled to, and remind employers of their duty to pay the correct wage”.
“In this toughest of years, we’re protecting workers by putting more money in the pockets of the UK’s lowest-paid.
“This increase will help millions of families in every corner of the country, while supporting businesses as we prepare to safely reopen our economy and build back better from the pandemic.
One group will miss out on this rise.
Workers who are on furlough due to the coronavirus pandemic will receive 80 per cent of their salary that was in place when they were furloughed. Aroun 4.7 million workers are currently on furlough, with around 800,000 in the lowest paid category.
The increase will apply to their wages when they return to work.
The full changes are:
- 23 or over, the minimum wage has increased 2.2 per cent, from £8.72 to £8.91
- 21 and 22, the minimum wage has increased 2 per cent, from £8.20 to £8.36
- 18 – 20, the minimum wage has increased 1.7 per cent, from £6.45 to £6.56
- Under 18, the minimum wage has increased 1.5 per cent, from £4.55 to £4.62
- The apprentice rate has increased 3.6 per cent, from £4.15 to £4.30
Mike Hawking works for the Joseph Rowntree Foundation. He said: “The pandemic has shown the urgency of taking steps to tackle the injustice of in-work poverty and move towards a Real Living Wage.
”Today’s boost is necessary but as we start to recover from the impact of the last year, too many workers are finding that minimum wage increases are being wiped out due to inadequate social security, insufficient hours available to them, and high housing costs.“
The Living Wage Foundation sets the voluntary Real Living Wage rates. The voluntary rate is currently £10.85 an hour in London and £9.50 elsewhere.
Laura Gardiner, their director said: ”The introduction of the National Living Wage has delivered a solid pay rise to minimum wage workers, and it’s welcome to see the government continuing to commit to ambitious increases.
“However, there is still a substantial gap between this wage rate and one based on the cost of living, with National Living Wage workers falling billions of pounds short of a real Living Wage over the past five years.
”The number of employers signing up to the Real Living Wage has continued to grow, even during the pandemic, as businesses recognise the benefits of a healthy and motivated workforce.“
Bryan Sanderson is the chairman of the Low Pay Commission. They recommend the statutory rates. He says: “It is a real-terms increase, meaning that an hour’s work can buy more than it could last year at the start of the pandemic. The level of the new rate however also reflects the need to protect workers from job losses.”
The commission estimates the National Living Wage rate will be £9.42 in is £9.42.
However, they say this is likely to change due to the amount of uncertainty in the pandemic.
Do you think it should be higher?