Rises in National Minimum and Living Wage come into effect

From today (1st of April), around 2.5 million UK workers will receive a pay rise, as the National Minimum Wage and National Living Wage increase.

The move, which comes at a time when the cost of living is rising dramatically, will put £1,000 a year more into full-time workers’ pay packets.

With the rise, the yearly earnings of a full-time worker on the National Living Wage will have increased by over £5,000 since the introduction of the National Living Wage by the government in April 2016.

Business Secretary Kwasi Kwarteng said: “We have never been more determined to make work pay, and by providing the biggest cash increase ever to the National Living Wage from 1 April, we are giving a boost to millions of UK workers.

“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.

“With more employees on the payroll than ever before, this government will continue to stand up for workers.”

Apprentices will also see their minimum hourly pay rise by 11.9%, with 21 to 22 year-olds seeing an immediate 9.8% rise. The National Living Wage, the minimum wage for over 23 year-olds, will also move up to £9.50 an hour.

The new National Minimum Wage and National Living Wage rates are both statutory minimums, and the government is encouraging businesses to pay workers above these whenever they can afford to do so.

The full list of increases from the 1st or April 2022 are listed below:

Rate From April 2022 Current rate (April 2021 to March 2022) Increase
National Living Wage £9.50 £8.91 6.6%
21 to 22 year old rate £9.18 £8.36 9.8%
18 to 20 year old rate £6.83 £6.56 4.1%
16 to 17 year old rate £4.81 £4.30 4.1%
Apprentice rate £4.81 £4.30 11.9%
Accommodation offset £8.70 £8.36 4.1%

Industry reaction

Jamie Mackenzie, Director at Sodexo Engage, says energy bills are rising considerably faster than wages in 2022.

He said: “While wage increases are certainly welcome, especially against the current backdrop of rising prices, this may feel like giving with one hand and taking back with the other. According to the Trades Union Congress (TUC), energy bills are due to rise at least 14 times faster than wages this year, more than cancelling out the boost of the minimum wage hike, and in turn, leaving households financially vulnerable.

“As such, the minimum wage increase may not prove enough to shield all employees from rising prices, and employers must do their part to ease their financial pressures where they can. 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.”

Bill Richards, UK Managing Director at the global job site Indeed, is also sceptical of the wage rises in light of rising living costs.

He said: “The National Living Wage increase today will be a welcome boost to the pay of some of the UK’s lowest earners but the reality is that many won’t feel it in their pockets. With inflation running at 6.6% and expected to rise to hit 8% in Spring, today’s hike ultimately is not a real-term salary increase.

“Personal financial situations across the UK are already at a real low: our recent survey reveals one in ten (11%) Brits are struggling to make ends meet and more than a quarter (29%) are unable to afford anything beyond essentials. And the cost of living will worsen still as energy prices and taxes are set to rise from today.

“While our recent survey shows some workers have seen inflation-busting pay rises driven by worker shortages, the stark reality for many is that their pay simply isn’t keeping pace. Findings show those who are financially comfortable are three-times more likely to be offered wage increases (19%) than those financially struggling (6%), and at greater rates.

“With inflation predicted to continue to rise, more and more people face being sucked into uncertainty. Low earners will be bearing the brunt of diminished real earnings due to the imbalance of pay rises – meaning those who need the most support are not receiving it.”

What does it mean for those on low pay?

Joanne Frew, UK head of employment law at DWF, comments on what it means to those on low pay and what employers need to do.

She said: “This timely annual increase will be welcomed by many as the UK faces the challenges of a cost of living crisis. The National Living Wage (NLW) for those aged 23 or over will increase from £8.91 to £9.50 an hour, a significant 6.6% increase. The apprentice rate is increasing by 11.9% from £4.30 to £4.81.

“Recognising that young workers have been severely impacted by the pandemic, the hike in minimum wage represents a clear step in the right direction. However, many would argue that the increases do not go far enough, to counter soaring inflation and the increased cost of living.

“As the lowest-paid workers are struggling to manage, employers will be under increased scrutiny with regard to National Minimum Wage (NMW) compliance. Due to the highly complex nature of NMW calculations, many high-profile employers have previously inadvertently fallen foul of the legislation, resulting in substantial penalties and reputational damage. Where workers are paid the NMW, or near to the NMW, employers should consider undertaking an NMW audit in order to minimise risk.”