Given that pay growth is still lagging behind the cost of living, the Government has announced it will be raising the national living wage (NLW) next year.
This is an obligatory minimum wage payable to workers in the UK aged 23 and over, which came into effect on April 1, 2016.
If you are 23 years old or above and classed as a “worker”, you are entitled to the national living wage (also known as the minimum wage).
Although wages have been rising at their fastest rate in more than 20 years, the cost of living is rising at a faster rate, largely due to the war in Ukraine.
The national living wage increase was encouraged by the Low Pay Commission, the independent body which advises the Government on the payment.
Their recommendations ensure the NLW continues on track to reach the Government’s target of two-thirds of median earnings by 2024.
Regular pay rose by 5.7 per cent this year, the fastest growth since 2000 excluding the pandemic, when some people secured big wage rises when returning to work from furlough.
However, the UK unemployment rate also rose slightly to 3.6 per cent in the three months to September, up from 3.5 per cent in August, the Office for National Statistics (ONS) said.
Mr Hunt said that “people’s hard-earned money isn’t going as far as it should” before he announced new economic policies in his Autumn Statement on Thursday.
He added that “[Vladimir] Putin’s illegal war has driven up inflation – a hidden and insidious tax that is eating into pay cheques and savings.”
“Tackling inflation is my absolute priority and that guides the difficult decisions on tax and spending we will make on Thursday,” the Chancellor added. “Restoring stability and getting debt falling is our only option to reduce inflation and limit interest rate rises.”
How much is national living wage increasing by?
The national living wage will rise to £10.42 per hour from £9.50, an increase of 92p or 9.7 per cent, for over 23 year olds.
The 21-22-year-old rate will rise to £10.18, for 18-20s it will go to £7.49, 16-17-year-olds will get £5.28, and apprentices will also receive £5.28.
When will the national living wage increase?
This will go into effect on April 1, 2023.
The rise of nearly 10 per cent will benefit around 2.5 million people, The Times said.
The move is part of a measure to close a financial gap in the nation by raising taxes by £22 billion and cutting spending by £33 billion.
What are the current national living wage and London living wage amounts?
As of April 2022, it is £9.50 per hour for those aged 23 and over, £9.18 for those aged 21–22, £6.83 for ages 18–20, £4.81 for under-18s and £4.81 for apprentices.
The London living wage is currently set at £11.95.