UK Government announce record wage boost for nearly 2.7 million workers next year

Chancellor Jeremy Hunt has confirmed a substantial increase in the National Living Wage (NLW), effective April next year. The raise, exceeding £1,800 annually for full-time workers, signifies a doubling of the wage in cash terms since 2010, reaching nearly £21,000 per annum.

In a noteworthy change, 21-year-olds on the NLW will consistently earn two-thirds of average earnings, aligning with the government’s commitment to addressing low pay. This 10% increase, from £10.42 to £11.44 per hour, represents the most significant cash adjustment to the NLW in over a decade. Simultaneously, eligibility for the NLW broadens, with the age threshold reduced to 21, resulting in a 12.4% increase for this demographic.

Approximately 2.7 million workers are expected to benefit directly from the 2024 NLW increase. This adjustment fulfills the government’s target of elevating the NLW to two-thirds of median earnings by 2024, addressing issues of low hourly pay.

Since its inception in 2016, the NLW has played a pivotal role in reducing the proportion of workers on low hourly pay from 21.3% in 2010 to 8.9%. Additional measures to support workers will be outlined in the forthcoming Autumn Statement.

Furthermore, the Chancellor highlighted a boost in the minimum hourly wage for apprentices. An 18-year-old apprentice in sectors such as construction will observe a pay raise of over 20%, from £5.28 to £6.40 per hour.

The OECD’s definition of low pay as earning less than two-thirds of average earnings underscores the broader implications of this NLW adjustment. The Chancellor’s commitment to equitable compensation and fostering employment remains central to the government’s agenda.

Chancellor of the Exchequer Jeremy Hunt said:”Next April all full-time workers on the National Living Wage will get a pay rise of over £1,800 a year. That will end low pay in this country, delivering on our manifesto promise.

“The National Living Wage has helped halve the number of people on low pay since 2010, making sure work always pays.

“The minimum hourly wage for an apprentice is boosted next year, with an 18-year-old apprentice in an industry like construction seeing their minimum hourly pay increase by over 20%, going from £5.28 to £6.40 an hour.

“The National Living Wage was introduced in 2016 and currently sets the minimum hourly pay a person over the age of 23 earns when working. The new rate will now apply to 21- and 22-year-olds, and means that the government has met its ambitious target of lifting the National Living Wage to two-thirds of median earnings by 2024, ending low hourly pay for those on the National Living Wage.

“Since 2010, the proportion of workers on low hourly pay has more than halved from 21.3% to 8.9%, supported by increases to the National Living Wage. Personal tax thresholds have been doubled, meaning a working person can now earn £1,000 a month tax-free for the first time.”

The Chancellor will set out further measures in today’s Autumn Statement.