Over a million low-paid workers in the UK are set to receive a wage increase as the government plans to raise the national living wage by 6% to £12.10 an hour.
- The Low Pay Commission may adjust recommendations upward if earnings growth continues to surpass expectations.
- Earnings for young workers aged 18 to 20 are likely to increase, moving towards a unified adult rate.
- Business leaders express concerns about the pressure of wage hikes on small firms, with labour costs cited as a significant challenge.
- Trade unions support the increase, arguing that past fears of job losses from minimum wage hikes have not come true.
The Low Pay Commission has announced a plan to increase the national living wage by 6%, raising it to £12.10 per hour. This initiative aligns with Labour’s mandate to align wages with two-thirds of median earnings, reflecting the current economic conditions. This policy is intended to assist over a million low-paid workers, part of Labour’s objective to ‘raise the floor on wages’.
The Commission, responding to Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds, is actively reviewing wage levels to ensure they match the evolving economic landscape. The increase is more than the 3.9% rise anticipated in March, driven by unexpected earnings growth in 2024.
Young workers, particularly those aged 18 to 20, are expected to benefit significantly as efforts continue to standardise wages across different age brackets. These workers currently earn a minimum of £8.60 per hour, but changes may bring their earnings in line with those aged 21 and over.
While unions like the TUC endorse the wage rise, arguing that historical concerns about job impacts have been incorrect, small businesses fear potential negative repercussions. Tina McKenzie from the Federation of Small Businesses highlights labour costs as a primary challenge, stressing the need for substantial support to help businesses adapt.
Nye Cominetti from the Resolution Foundation acknowledges that while wage increases generally help workers, they pose potential risks to employment levels as they rise. He highlights the need for policymakers to navigate these complexities carefully. A Department for Business and Trade spokesperson emphasised the need to weigh the positive impact on workers’ earnings against potential implications for businesses and the economy.
The UK’s proposed wage increase seeks to balance improved earnings for workers with the economic viability of businesses.
