The National Minimum Wage and National Living Wage are set to rise in April 2020, the government has confirmed.
The new rate of pay will come in on 1 April 2020, a rise from £8.21 to £8.72 for workers over the age of 25, marking an increase of 6.2 per cent, a rise of £930.The raise 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% increase from £7.70 to £8.20 an hour.
It will be £9.30 across the UK and £10.75 in London. Employers registered as Living Wage employers have until May 2020 to implement the changes.
Both Labour and the Conservatives have announced minimum wage policies ahead of the general election. The Conservative pledge is to reach a minimum wage of £10.50 by 2024 for workers aged 21 or over. Labour’s pledge is for £10 for all workers, regardless of age in 2020.
Nearly three million workers are set to benefit from the increases to the NLW, as well as the rise in minimum wage rates for younger workers, according to estimates from the independent Low Pay Commission.
Prime Minister Boris Johnson said: “For too long, people haven’t seen the pay rises they deserve.”
Commenting on the Government’s adoption of the Low Pay Commission’s recommendations for rates from April 2020, Kate Nicholls, CEO, said “Hospitality operators absolutely want to reward the great work of their staff. In order to make that growth sustainable, other measures are needed to mitigate cost growth.
“UKHospitality has long argued that business rates place an unfair burden on hospitality. It is now critical that rates are cut for the sector in April, to provide relief while the Government’s commitment to a more fundamental review of business taxation is delivered.
“The new Government must also address employer National Insurance Contributions (NICs) so that business can pay higher wages while continuing to invest in their businesses and future jobs.
“We welcome the continued oversight of the LPC in ensuring that future wage rates are set independently and safeguard the economy. This is particularly important outside of London where it is harder to mitigate wage increases with price increases. We look forward to working with the LPC to deliver on industry and Government’s shared ambitions for the workforce.”
The Federation of Small Businesses (FSB) said : “an increase of this magnitude” means firms may recruit fewer people, cancel investment plans or consider redundancies.
“There’s always a danger of being self-defeating in this space,” said Craig Beaumont, FSB director of external affairs and advocacy.
“Wage increases aren’t much good to workers if prices rise, jobs are lost and there’s no impact on productivity because employers are forced to cut back on investing in tech, training and equipment.”
He said that small firms will need support, especially as there will be a 1.7% increase in business rates in April next year.