Minimum wage pay rise 2020: the new national living wage, who will get an increase and when it changes
It means a full-time worker aged 25 or over who receives the National Living Wage will get a pay rise of £930.
The new rate of pay will come into effect on 1 April 2020, and will see hourly pay increase from £8.21 to £8.72 for workers over the age of 25 - a rise of 6.2 per cent.
It will also see younger workers receive a boost to the national minimum wage of between 4.6 per cent and 6.5 per cent depending on their age, with 21-24-year-olds seeing a 6.5 per cent increase from £7.70 to £8.20 an hour.
“Hard work should always pay, but for too long, people haven’t seen the pay rises they deserve," said Prime Minister Boris Johnson.
“Our government will put a stop to that, giving nearly three million people from Edinburgh to Eastbourne a well-earned pay rise, including the biggest ever cash boost to the National Living Wage.”
However the rise has been criticised for both being too little, and for "piling further pressure" on businesses.
He said: “The UK National Living Wage is still not a real Living Wage - even for those who will receive the full rate – and it cannot be right that workers aged 18 to 25 receive a lower rate of pay.
“That is why the Scottish Government supports the payment of the real Living Wage of £9.30 per hour. Unlike the UK National Living Wage, this is a minimum rate which applies to all workers over the age of 18."
Why is the National Living Wage being raised?
The rise follows the Conservatives’ promise during its annual conference in September to increase the National Living Wage to £10.50 an hour over the next five years if “economic conditions allow”.
The Tories had also written the pledge into their manifesto, which would see an individual’s net earnings rise by £1,900 over five years.
The increased rates were recommended by the Low Pay Commission, an independent body that advises the Government on the living wage.
“We want to end low pay and put more money in the pockets of hard-working families," Chancellor Sajid Javid said.
"This latest rise will mean that since we introduced the National Living Wage in 2016, the lowest paid will have had a wage increase of more than £3,600.”
Frances O’Grady, the leader of the Trades Union Congress, said: “This is a long-planned raise, but it’s also long overdue.
"Workers are still not getting a fair share of the wealth they create. And in-work poverty is soaring as millions of families struggle to make ends meet.”
Currently 80.6 per cent of Scottish workers - approximately 1,955,000 people - earn at least the real Living Wage of £9 per hour, but the Scottish Government want to see a 1 per cent rise by 2022.
The pay rises in full:
The National Living Wage (for over 25 year olds) will increase 6.2% from £8.21 to £8.72.
The National Minimum Wage will rise across all age groups, including:
A 6.5% increase from £7.70 to £8.20 for 21-24 year olds
A 4.9% increase from £6.15 to £6.45 for 18-20 year olds
A 4.6% increase from £4.35 to £4.55 for Under 18s
A 6.4% increase from £3.90 to £4.15 for Apprentices
What's the difference between the National Living Wage and UK Minimum Wage?
The National Living Wage was introduced by the government in 2016 and billed as a higher minimum wage rate for workers aged 25 and over. This pay rate is legally binding.
The current National Living Wage is £8.21, having risen from £7.83.
The minimum wage is a wage rate released by the government is a negotiated settlement based on recommendations from trade unions and and businesses.
The real living wage is an independently calculated wage rate which aims to be higher than the cost of living in the UK.
Calculated by the Living Wage Foundation it takes into account rental costs, council tax, shopping costs, and travel costs.
Companies are not legally obliged to sign up to the real living wage, but can become and accredited real living wage employer if they choose to do so.
Roughly 4,700 employers are real living wage accredited, including Oxfam, KPMG, Liverpool Football Club, Nestle, Burberry, Aviva, Ikea, and Linklaters.