In a move expected to impact over a million low-paid workers across the UK, Chancellor Rachel Reeves is reportedly planning a hike in the minimum wage by more than 6%. Sources indicate that the Chancellor is anticipated to make the announcement during Wednesday’s Budget, following recommendations from the Low Pay Commission.
Currently, the national living wage, which applies to workers aged 21 and over, is set at £11.44 per hour. Earlier in the year, the Low Pay Commission recommended an increase to £11.89. However, recent reports suggest that ministers are considering a rise that could push the rate above £12.12 per hour. This adjustment aligns with the government’s ongoing commitment to “raise the floor” on wages, ensuring that the lowest earners in the UK workforce benefit from increased financial support.
Changes for Younger Workers on the Horizon. In addition to adjustments for those over 21, younger workers may also see significant changes. Presently, workers aged 18 to 20 receive a lower rate of £8.60 per hour. However, with the potential shift towards a unified adult rate, these younger employees could benefit from a more substantial increase. For many young workers, this adjustment would not only offer an immediate boost to income but would also establish a more equitable wage structure, reinforcing the government’s stance on fair wages across age groups.
While this anticipated increase is welcomed by many workers, it has sparked concern among business representatives, particularly within the small business sector. Craig Beaumont, executive director of the Federation of Small Businesses (FSB), cautioned that the potential combination of wage hikes and increased National Insurance contributions could strain small businesses. He highlighted the impact on employment decisions, indicating that the new National Insurance rates could increase hiring costs by £600 per employee, a significant sum for smaller employers.
“Small business owners are among the hardest working people imaginable,” Beaumont stated, acknowledging the entrepreneurial spirit of these business owners. “They are strivers, working long hours to run their business and, in many cases, create jobs and opportunities.” Beaumont suggested that the added financial pressures might prompt small businesses to put recruitment plans on hold or even consider workforce reductions.
This potential minimum wage increase is part of the government’s broader strategy to address living costs and improve the quality of life for low-wage earners. With inflationary pressures and cost-of-living concerns persisting, an increase in the minimum wage could provide essential relief for many households. However, balancing these adjustments with the realities faced by small businesses will be crucial to maintain economic stability.
The Workers Union Says…
We at TWU continue to closely monitor developments around wage policies, advocating for measures that protect workers while ensuring sustainable growth for UK businesses.
