CashNews.co
More than 3 million workers will receive a pay boost after chancellor Rachel Reeves confirmed the national living wage will increase from £11.44 to £12.21 an hour from April 2025.
The 6.7% increase is worth £1,400 a year for an eligible full-time worker, according to HM Treasury.
The announcement was made a on Tuesday, a day before Rachel Reeves is set to deliver her autumn budget to the parliament.
The national minimum wage for 18 to 20-year-olds will also rise from £8.60 to £10.00 an hour – the largest increase in the rate on record. This £1.40 increase will mean full-time younger workers eligible for the rate will see their pay boosted by £2,500 next year.
Reeves said: “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.”
The minimum hourly wage for an apprentice will also increase next year, with an 18-year-old apprentice in an industry like construction seeing their minimum hourly pay increase by 18%, a pay bump from £6.40 to £7.55 an hour.
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The Department for Business and Trade estimate more than 3 million workers will directly benefit from the 2025 national living wage increase, nearly 200,000 workers will directly benefit from the increase to the national minimum wage for 18 to 20-year-olds, and over 130,000 workers will benefit from the uplifts to the rate for apprentices and those aged under 18.
The Labour government said this the wage increase for 18 to 20-year-olds was a step towards delivering the manifesto commitment to create a single adult wage rate, “which would take place over time”.
Nye Cominetti, principal economist at the Resolution Foundation, said: “But while large in cash terms, this latest increase is actually smaller than each of the last two years, when the minimum wage rose by almost 10%.
“This smaller rise in the minimum wage – the first time in almost a decade when it has risen no faster than typical wage growth – is sensible in the context of an expected rise in employer national insurance contributions at the same time. The government may want to take a more ambitious approach in future years.
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“With the government also announcing a record rise in the national minimum wage for those aged 18-20 (which will rise by £1.40 to £10 an hour) the Low Pay Commission must continue to monitor the employment effects of a higher minimum wage, including whether firms are switching to self-employed labour to minimise their tax bills and employment rights obligations.”