What is the minimum wage? Government to implement major changes to reflect cost-of-living crisis
Ministers are poised to announce changes ensuring the Minimum Wage keeps up with the cost of living.
For the first time, officials will be required to consider living costs when calculating the Minimum Wage level, according to the Mirror. The reforms will also address the disparity between the Minimum Wage for younger and older workers, reducing the gap.
The decision follows a new poll revealing that 70 per cent of voters believe the lower rate for 18- to 20-year-olds should be abolished.
Currently, the Low Pay Commission (LPC) advises ministers on the Minimum Wage rate without factoring in whether it meets the basic living expenses of low-paid workers.
Business secretary Jonathan Reynolds has now directed the independent body to incorporate cost-of-living considerations into their future recommendations.
“For too long, working people have faced the worst of the cost-of-living crisis, but this government is taking bold action to address it and make work pay,” he told the Mirror. “The new remit to the LPC is the first of many vital steps we will take to support more people to stay in work and improve living standards.
“Our focus remains on putting more money in working people’s pockets and boosting economic growth.”
What is the Minimum Wage?
The Minimum Wage – the full title of which is the National Minimum Wage (NWM) – refers to the legal lowest amount that UK employers must pay their workers per hour of work. It is a statutory requirement set by the Government to ensure that workers receive a fair and reasonable level of pay.
The Minimum Wage aims to protect workers from exploitation and ensure they receive an income that covers basic living standards.
The NWM rates in the UK are typically differentiated based on factors such as workers’ age and whether they are an apprentice. These rates are periodically reviewed and adjusted by the Government to reflect changes in living costs and other economic considerations.
How is the Minimum Wage increase calculated?
The rates are decided each year by the Government, based on the advice of the LPC.
Each year, the LPC advises the government on what rates the different minimum wages in the UK should be. It is then up to the government to accept or reject the LPC's recommendations.
How much is the minimum wage?
As of 1 April 2024, the rates are:
National Living Wage for over-23s: £11.44 an hour
National Living Wage for those aged 21-22: £11.44
National Minimum Wage for 18 to 20-year-olds: £8.60
National Minimum Wage for under-18s: 6.40
The Apprentice rate: £6.40 up from £5.28
What are the national and real living wages?
The national living wage is higher than the NMW – workers get it if they are over 23.
The real living wage is an hourly rate based on the basic cost of living in the UK. But, unlike the legally enforceable national minimum wage, whether or not to pay the real living wage is a voluntary decision for an employer.
What is the London living wage and how much is it?
The London living wage (LLW) is a voluntary hourly wage rate that is calculated independently by the Living Wage Foundation. It is designed to reflect the higher cost of living in London compared with other parts of the UK. The LLW is not a statutory requirement, but many employers in London choose to pay their workers this higher rate as a commitment to fair pay.
The Living Wage Foundation calculates the LLW based on the actual cost of living in London, taking into account factors such as housing, transport and other basic expenses. The LLW is intended to provide workers with a wage that allows them to cover their essential needs and maintain a decent standard of living in the capital city. The exact amount of the LLW can vary and is updated annually. You can check future amounts on this website.