By Lowri Pitcher
On April the 1st 2019, changes to the National Living Wage (NLW) which were presented during October 2018’s budget came into force. As part of the Government’s modern Industrial Strategy introduced in 2018, employees receiving the National Living Wage (the same as the National Minimum Wage which is applicable to individuals over 25 years old), will increase from £7.83 to £8.21 per hour. This change is expected to help up to 1.8 million workers who will be earning an extra £690 annually. This represents an increase of 5% to the NLW, the biggest increase in wages since 2015.
This means that full-time workers on the National Living Wage will now be more than £2,750 better off a year than in 2015 before the NLW was implemented. The National Minimum Wage (for workers 16 – 25) is also increasing from £7.38 to £7.70 per hour for 21-24 year olds and from £5.90 to £6.16 for 18-20 year olds, which should provide full-time workers with an additional £580 and £455 a year respectively.
Jointly, the increases to the National Minimum Wage and National Living Wage mean that 2.1 million people will receive a pay-rise. Of these, 60% are female and 800,000 are retail and hospitality workers. This will be particularly useful to the 86% of bar staff and 83% of waiters & waitresses that earn the minimum wage.
In response to the Government’s new regulations, director of the Living Wage Foundation, Katherine Chapman, said: “The increase in the government minimum wage will provide a welcome boost for low-paid workers, but this is still over £1,500 a year short of a Real Living Wage.” The Real Living Wage is a recommended minimum wage which considers the basic cost of living in the UK, currently set at £10.55 an hour for London and £9 per hour for the rest of the UK. Although more than 5,000 companies, including Nestle, Barclays and EDF, voluntarily pay this wage, there is no legal obligation to do so. Chapman continues: “Around six million workers are now paid less than the living wage and are struggling to keep their heads above water.”
The Trades Union Congress (TUC) also raised the common complaint that these wage increases help those who are over 25 years old, though they do little for the youngest workers in society. Its research indicated that the average 21-24 year old working on minimum wage is currently earning £800 pounds less a year than their counterparts over 25. The TUC campaigns for everybody over 21 years-old to earn the full minimum wage of £8.21, and for the rate itself to be increased to £10 an hour as soon as possible.
The minimum wage in the UK is currently growing faster than many other countries with similar or higher wages including France, Germany and Belgium. This change is one of many objectives set out in the Conservatives’ modern Industrial Strategy which, since its introduction in 2018, has implemented the biggest increase to workers’ rights in a generation. The strategy also aims to promote the sustainable use of artificial intelligence in the workplace as well as encouraging clean growth as the UK continues to thrive in a globalised market.