With the rising cost of living impacting families across the UK, any news of a pay rise comes as a welcome relief.
For millions of workers on low incomes, there’s some positive news on the horizon: the national minimum wage is set to increase, bringing a boost to the pay of over 1.6 million people.
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Here’s a breakdown of what this means, who will benefit, and what it could mean for people trying to make ends meet.
What’s changing with the minimum wage?
The national minimum wage, also known as the “national living wage” for workers aged 21 and over, is the lowest legal hourly rate an employer can pay their employees.
The rate is reviewed every year to help keep wages in line with the general pay levels across the country.
According to recent reports, we’re expecting a 6% increase in 2025, which could see the national living wage for those over 21 rise from £11.44 per hour to £12.12.
This would be a meaningful increase for those in low-paid jobs, many of whom are trying to balance tight budgets in the face of everyday expenses.
The increase will impact workers in all age brackets, with younger employees (aged 18-20) also set to receive a boost to bring their rates closer to those of over-21s.
This would mean a much-needed pay rise for younger workers, many of whom work in retail, hospitality, and other industries with traditionally lower wages.
Why is the minimum wage going up?
The government reviews the minimum wage each year, and this year, ministers have set a goal for it to reflect two-thirds of the country’s average pay.
The Low Pay Commission, which advises on minimum wage levels, recently suggested a 5.8% rise based on this guideline, but with further increases in earnings across the UK, it looks like we’re seeing closer to a 6% rise for next year.
By aiming to keep minimum wage in line with the average pay, the government is hoping to offer better financial stability for lower-income households.
How does the minimum wage compare to the real living wage?
The “real living wage” is another hourly pay rate in the UK, but it’s different from the minimum wage.
Unlike the national minimum wage, the real living wage is based on the cost of everyday essentials, calculated by the Living Wage Foundation.
While employers aren’t legally required to pay the real living wage, many choose to sign up for it to ensure they’re paying staff enough to cover typical living expenses.
This rate is set to go up by 5% in the coming year, providing an extra £1,170 annually for those outside London and £1,365 for those living in the capital.
The increase aims to keep pace with rising costs, from energy bills to food shopping.
Current rates and new rates for 2025
As of now, here’s a quick look at the minimum wage rates per hour across age groups:
- 21 and over: £11.44, expected to rise to £12.12
- 18 to 20: £8.60, likely to see an increase to bring it closer to over-21 rates
- Under 18 and Apprentices: £6.40
For comparison, the real living wage currently provides higher hourly rates than these legal minimums and is updated to reflect real-life expenses across the country.
When can workers expect the pay rise?
The new wage rates are expected to take effect in April 2025, coinciding with the start of the new tax year.
While this pay increase will make a difference, it’s worth keeping in mind that inflation and the rising cost of living continue to be challenges for many households.
This planned increase in minimum wage is a positive step, bringing a welcome boost to workers on low incomes.
If you or someone in your household is on minimum wage, it’s worth planning ahead for April to see how this increase could help cover essential expenses or even provide a little breathing room in your budget.
While it won’t solve every financial challenge, it’s a step towards better pay for millions of people across the UK, giving them a bit more security in an uncertain economic climate.
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