UK Workers Get Pay Bump: Minimum Wage Hits £12.21

UK Government Announces 6.7% Minimum Wage Hike to £12.21

“This government promised a genuine living wage for working people...”

UK Minimum Wage Increases 6.7% to £12.21/hour: Supporting Low-Paid Workers Amidst Economic Pressures

The UK's minimum wage is getting a boost. Starting April 2025, the National Living Wage will increase by 6.7% to £12.21 per hour, up from £11.44. This change, announced by Finance Minister Rachel Reeves, aims to help low-paid workers cope with the rising cost of living. The new Labour government wants the minimum wage to reflect the actual cost of living and boost low earnings, while maintaining the two-thirds median hourly earnings threshold set by the previous Conservative government.

Who Benefits from the Increase?

• Around 3 million workers will directly benefit from this change.

• Thousands of care workers, who currently earn on or just above the National Living Wage, will receive a pay rise.

• Younger workers (18-20 and 16-17 years old) will see larger increases, with 16.3% and 18.0% rises, respectively.

Concerns for Employers

• Businesses, especially small ones, are worried about implementing these increases due to already rising costs.

• Providers will need to increase fees charged to councils, NHS commissioners, and self-funders to cover the rise.

• The Homecare Association estimates a £1 billion shortfall in home care fees paid by councils and the NHS in 2024-25.

Broader Economic Impact

• The increase may lead to higher consumer spending, driving economic activity, but also potential inflationary pressures.

• The Low Pay Commission aims to balance workers' needs with economic realities facing businesses.

“This government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise,” Reeves said in a statement.

The Low Pay Commission highlights the substantial 20% increase in the adult minimum wage over the past two years, impacting employers' bottom lines.

“The data show some signs of employers finding it harder to adapt to minimum wage increases,” LPC chair Philippa Stroud said.

The Low Pay Commission (LPC) will release its comprehensive report on Wednesday, providing detailed data on the minimum wage increase.

The Confederation of British Industry (CBI) expressed concerns that the 6.7% minimum wage hike will:

° Put additional pressure on company finances

° Limit investment spending