The National Living Wage is the minimum hourly rate employers must pay workers over the age of 23. In Jeremy Hunt’s Autumn Statement, he announced that the National Living Wage will rise by 9.7% - going up to £10.42, which is the largest increase in the National Living Wage ever.
In 2015, at the end of his Autumn budget, then Chancellor of the Exchequer George Osborne announced a new amendment to the National Minimum Wage Act 1998 - a new rate specifically to help people 25 and over.
When the policy was first introduced it urged employers to pay staff at the rate of £7.20 p/hr. Since then, the number has risen and the policy has been extended to those 23 and above.
Companies that are required by law to pay the Living Wage to employee’s 23 and over but campaign groups such as The Living Wage Foundation provide an independently calculated wage based on the cost of living. Here’s everything you should know about the National Living Wage.
What is the National Living Wage?
The National Living Wage was introduced in the UK in April 2016. The policy originally applied to employees aged 25 or over but was extended to those aged 23 and above last year.
A National Living Wage provides a benchmark for employers to ensure their workers are earning a fair wage that reflects the demands of the economy at large. Over the years, employers who pay the National Living Wage have seen a boost in work morale, leading to fewer employees on sick leave and a lower turnover of staff.
It’s important to note, the National Living Wage is not means tested on employees or families and their needs but based on a target to reach 66% of median earnings by 2024.
The National Living Wage is different to the Real Living Wage which is calculated and recommended by the Living Wage Foundation. The government rate is based on median earnings, while the Living Wage Foundation rates remain the only wage rates independently calculated according to the cost of living in London and the UK.
Katherine Chapman, Director of the Living Wage Foundation, said: “The significant rise in the National Living Wage to £10.42 is welcome news for low-paid workers struggling with rising inflation. It’s encouraging that the government is taking steps to increase the pay on the lowest incomes as prices continue to rise. However, the rates remain lower than the real Living Wage – currently £10.90 in the UK and £11.95 in London – which is based on what it actually costs to live.”
What is the minimum hourly rate of pay currently in the UK in 2022?
Subject to change on April 1 every year, the National Living Wage (for those aged 23 and over) sits at £9.50. The National Minimum Wage for those under 21-22, 18-20, under 18 and apprentices, are as follows:
- 21-22: £9.18
- 18-20: £6.83
- Under 18s: £4.81
- Apprentice: £4.81
When does the National Living Wage increase?
As mentioned in his Autumn Statement, Jeremy Hunt has announced the National Living Wage will rise by 9.7%, from £9.50 to £10.42. The measures are expected to come inot place in April 2023.