Key Takeaways
- National Living Wage rises to £12.71/hour (4.1% increase) for workers 21+
- Younger workers get higher increases: 18-20 year olds get 8.5% rise to £10.85/hour
- 2.7 million workers to benefit from the wage increases starting April next year
The UK government has announced significant minimum wage increases that will benefit 2.7 million workers starting April next year. Chancellor Rachel Reeves confirmed the changes following recommendations from the Low Pay Commission.
New Wage Rates Breakdown
The National Living Wage for workers aged 21 and over will increase by 4.1% to £12.71 per hour. This translates to an annual pay rise of £900 for full-time workers, benefiting approximately 2.4 million low-paid workers.
Younger workers receive even larger increases. The National Minimum Wage for 18-20 year olds rises by 8.5% to £10.85 per hour, narrowing the gap with the National Living Wage. This means an annual earnings increase of £1,500 for full-time workers in this age group.
For 16-17 year olds and apprentices, the rate increases by 6% to £8 per hour.
Government Statement
Chancellor Rachel Reeves stated: “I know that the cost of living is still the number one issue for working people and that the economy isn’t working well enough for those on the lowest incomes. Too many people are still struggling to make ends meet, and that has to change.”
She emphasized the government’s commitment to “properly reward” low-income workers for their hard work.
Industry Reactions
Support from Unions
TUC general secretary Paul Nowak welcomed the “above-inflation pay rise” that will “make a real difference to the lowest paid.”
GMB’s Ross Holden called it “fantastic news for millions of low-paid workers” and noted the higher increase for young workers represents progress toward “equal pay for equal work, no matter your age.”
Business Concerns
UKHospitality’s Kate Nicholls warned that “hospitality businesses have reached their limit of absorbing seemingly endless additional costs” and that costs “will simply all be passed through to the consumer, ultimately fuelling inflation.”
The British Chambers of Commerce’s Jane Gratton expressed concern that “every above-inflation wage increase leads to higher business costs, lower investment and fewer opportunities for individuals.”
Independent Assessment
Living Wage Foundation director Katherine Chapman noted that while the increase is “a really positive move,” it still falls short of the voluntary real living wage of £13.45 (£14.80 in London).
Low Pay Commission chair Baroness Philippa Stroud said their recommendations balanced “the Government’s ambitions with the need to protect the economy and labour market.”
