Millions of workers on minimum wage will get a boost in their earnings as the chancellor, Rishi Sunak, is set to increase the minimum hourly pay for over-22s.
The rise comes as part of the government’s Autumn Budget announcement on Wednesday, which will come into force in April.
But how much is the pay bump, and how does the national minimum wage differ from the national living wage?
Here is all you need to know.
What is the national minimum wage?
This is the minimum pay per hour all workers are entitled to.
People classed as ‘workers’ must be at least school-leaving age to claim the wage.
The current minimum wage rates as of April 1, 2021, are:
- Ages 23 and over (The living wage): £8.91
- Ages 21-22: £8.36
- Ages 18-20: £6.56
- Under-18: £4.62
- Apprentices: £4.30
Some workers aren’t entitled to the minimum wage, such as self-employed people, volunteers, prisoners, or people on pre-apprenticeships schemes.
Find out more on the government website.
What is the national living wage?
The so-called living wage is the government’s set minimum rate which employers must pay staff aged 23 and over for each hour worked.
Essentially, if you’re over 23, you are legally entitled to the living wage. If you’re under 23, you are only entitled to the national minimum wage, which varies based on your age.
The living wage is currently £8.91 an hour – but this will increase to £9.50 next April.
This means employees will receive 6.6% more in their pay packets and now it has kicked in, which is the third-biggest hike since the 2008 financial crisis.
For someone working 35 hours a week on the national living wage, the increase is worth just over £1,070 a year in earnings before tax, or around £90 a month.
You can check if you are being paid the correct minimum wage on the goverment website.
The minimum wage is currently expected to stay at £8.36 for those aged 21 and 22, and £6.56 for 18 to 20-year olds.
As well as the national living wage, there is an unofficial and voluntary ‘real living wage’.
This is calculated by the Living Wage Foundation, a campaigning organisation, and is based directly on the cost of living.
According to the foundation, the ‘real’ living wage is currently £9.50 an hour for workers across the UK and £10.85 in London.
If you want to check if your employer has signed up for the voluntary scheme, then visit the Living Wage website to view the full list of accredited companies.
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