Almost two million workers across the UK will get a “significant” pay boost when the national living wage (NLW) increases from Saturday.
The 92p rise to £10.42 an hour for workers aged 23 and over is equivalent to a near 10% increase, according to The Resolution Foundation.
Separately, the national minimum wage for people aged 21 to 22 will also increase, going up by £1 to £10.18.
For those aged 18 to 20 it will increase to £7.49 from £6.83. People aged under 18 and on apprentice contracts will see the minimum wage rise from £4.81 to £5.28.
The Poverty Alliance in Glasgow, which delivers the Living Wage Scotland programme, estimates that more than 140,000 workers across Scotland will benefit from the new rates coming into effect from April 1.
What are the new minimum wage rates?
|Wage||Rate from Saturday||Previous rate||Increase|
|National Living Wage||£10.42||£9.50||9.7%|
|National Minimum Wage (aged 21 to 22)||£10.18||£9.18||10.9%|
|National Minimum Wage (aged 18 to 20)||£7.49||£6.83||9.7%|
|National Minimum Wage (Under 18s and apprentices)||£5.28||£4.81||9.7%|
Lynn Anderson, living wage Scotland manager at the Poverty Alliance said: “The increase in statutory wage rates taking effect from 1 April will offer some relief for thousands of low paid workers in Scotland, who are struggling to stay afloat amid rising costs.
“However only workers aged 23 and over will be eligible for the highest legal wage rate of £10.42, which is still lower than the real living wage rate of £10.90.
“The real living wage is independently calculated each year based on the amount (that) workers and their families need to get by, and a new rate will be announced this autumn.
“We urge employers to go further than the law requires, and join the movement of more than 3,000 accredited living wage employers in Scotland that have committed to paying wages that reflect living costs.
“More than 60,000 workers, employed by the living wage employer movement in Scotland benefit from the security of the real living wage as costs continue to rise.”
Minimum wage ‘has transformed hourly pay inequality’
Around 1.7 million workers currently earning up to 5p above the current minimum wage will directly benefit in full from the increase in the NLW, though potentially another five million low-paid workers will benefit indirectly from its “spillover” effects as employers look to maintain differentials between pay bands.
Since its introduction in April 1999, when it was £3.60 for workers aged 22 and over, the minimum wage has transformed hourly pay inequality across Britain, the foundation said.
But it said inequality has remained high and largely unchanged, saying action on low pay must be complemented by wider drives on employment, taxes, benefits and housing costs if living standards for low and middle-income families are to rise.
The Resolution Foundation said the increase in the NLW is the biggest annual cash rise in the 24-year history of the minimum wage and one of the largest annual percentage rises.
The foundation said the scale of the increase means the lowest-paid workers will enjoy a “rare” real-terms pay boost.
Nye Cominetti, senior economist at the Resolution Foundation, said: “From tomorrow, millions of Britain’s lowest earners are set for a significant pay boost as the national living wage rises by almost £1 an hour.
“This latest rise isn’t just delivering a much-needed pay rise tomorrow, it has transformed earnings across Britain over the past quarter of a century – reversing rising pay inequality and halving levels of low pay.
“But as well as celebrating the success of the national living wage it’s also important to understand its limits.
“Ultimately, continued progress on tackling low pay should be complemented by action to boost people’s hours and employment, as well as reforming our tax, benefit and housing systems. That’s the only way to really get living standards up and income inequality down.”
TUC – Minimum wage going up less than inflation
The Trades Union Congress (TUC) said the minimum wage is going up less than inflation and food prices.
General secretary Paul Nowak said: “Everyone who works for a living deserves to earn a decent living, but tomorrow’s below-inflation increase to the minimum wage is not going to lift the pressure on hard-pressed families.
“A large chunk is going to be wiped out by soaring energy bills, and with food prices shooting through the roof, many low-paid workers will not see a positive difference in their spending power.
“It’s time to put an end to low-pay Britain. That means getting the minimum wage to £15 an hour as soon as possible, and it means introducing industry-wide fair pay agreements so that all workers have a minimum set of pay and rights – starting with social care and the ferries sector.”
The ‘real’ living wage
The Living Wage Foundation said 12,000 employers already pay the voluntary “real” living wage of £10.90 an hour and £11.95 in London.
A worker earning the statutory rate would need an extra £936 a year to bring their income in line with the voluntary figure, according to its research.
Katherine Chapman, director of the Living Wage Foundation, said: “This significant rise in the national living wage is a welcome boost to ease some of the pressure inflation continues to pile onto low-paid workers.
“It remains lower than the real living wage which is based on the cost of living. The good news is we have seen record numbers of employers signing up to pay the higher real living wage to protect their lowest paid staff during these tough times.”
The End Fuel Poverty Coalition estimated that the benefits of the first 73 hours of work each month under the updated national living wage will be “wiped out” by the energy bills increase, which also comes in from April 1.
Simon Francis, co-ordinator of the Coalition said: “As employers give people on the NLW pennies, the (UK) Government is taking pounds out of their pocket due to the end of the energy bills support scheme.”