UK Minimum Wage and Living Wage Changes Come into Effect on April 1

The National Living Wage (NLW) in Britain, for workers aged 21 and over will reach £11.44 ($14.45) per hour, rising by 9.8%, effective April 2024, as announced by the Department for Business and Trade on March 27 and reported by Reuters.

The government is also boosting the National Minimum Wage (NMW) rates for younger employees to £8.60 for 18-20 year olds and £6.40 for those under 18 and apprentices.

This comes after the UK government successfully narrowed the wage gap by accepting the recommendations of the Low Pay Commission, with the rate standing as one of the highest among advanced economies.

The planned increases in both the UK National Living Wage and National Minimum Wage are anticipated to enhance the earnings of approximately 3 million low-wage workers.

The new NLW rate, reaching two-thirds of median earnings for individuals in that age bracket, was decided upon as a political commitment to increase minimum wage in tandem with median earnings by 2025.

The rate represents a 10% increase in cash terms compared to the 2023 NLW rate of £10.42 per hour.

As such, while this increase has been implemented, broader initiatives for additional minimum wage hikes have been paused by the government, aiming to provide some relief to employers.

Britain’s National Minimum Wage and Living Wage:

• The National Minimum Wage (NMW) was first introduced in Britain 25 years ago to address wage inequality concerns through the National Minimum Wage Act 1998 which was passed by the UK Parliament, coming into force on April 1, 1999.
• On April 1, 2016, the government enforced a mandatory National Living Wage (NLW) for individuals aged 25 and above, initially set at £7.20, representing a 50p increase from the prevailing NMW rate.
• From April 1, 2024, the age threshold for the NLW has now become 21 and older.
• The NLW amount varies based on age and whether one is an apprentice. 

Additional Information:

• Employers have expressed concerns regarding substantial wage increases in recent years, largely driven by inflation, which has placed pressure on them to either raise prices or reduce hiring. 
• A survey conducted by Lloyds Bank and published indicated a slowdown in hiring plans, potentially associated with the minimum wage increase.
• According to the Resolution Foundation, low earners are now receiving £6,000 more annually than they would have if their wages had risen in line with typical pay growth.
• The Bank of England is closely monitoring wage growth as it evaluates whether inflationary pressures in the economy are easing sufficiently to warrant interest rate cuts.
• The Low Pay Commission is an advisory group composed of experts that counsels the government on minimum wage adjustments.