National Minimum Wage Increase

“It’s a step up in pay, a step up for hard workers; a hand up, not a hand down,” says the government’s video announcing the National Minimum Wage which comes into effect on 1^st April 2016 and will result in an extra 50p for every hour worked by anyone in the UK over the age of 25 who is on the national minimum wage.

The increase brings the national minimum wage up to £7.20 per hour and is being touted by the government as a ‘step up for Britain’. The rhetoric is clear; businesses are being asked to ‘step up’ too, and pay at least the new minimum wage when it is legally enforced in April. It also serves to remind us the Government has a vision of a ‘higher wage, lower welfare, lower tax society’.

The national minimum wage was first launched in April 1999 following the introduction of the National Minimum Wage Act the year before. An independent body – the Low Pay Commission (LPC) – had been established that same year in order to advise the government on the minimum amount UK employees should be paid. Back then, it stood at £3 per hour for those aged between 18 to 21 and £3.60 for everyone else.

Since then, it has regularly courted controversy. Whether it be the introduction of zero hours contracts muddying the water or nefarious businesses doing all they can to pay below the minimum wage, the scheme has spent its fair share of time on the front pages of the tabloid press.

According to a government study, 70% of workers claim they will feel more positive about themselves and their families once the new National Living Wage comes into effect. What’s more, it suggests nearly 60% of workers will be more motivated as a result of the increase in their pay packets.

It is estimated over 1 million workers in the UK will directly benefit from the annual wages increase rising up to £900 per year. This is certainly a positive step forward and is at odds with other G7 countries. Especially when you bear in mind that it is the largest annual increase in the minimum wage rate since 2009.

Chancellor George Osborne is, as you would expect, rather bullish about the rise. “The new National Living Wage is an essential part of building the higher wage, lower welfare, lower tax society that Britain needs and it’s great to see that over a million people will see their living standards boosted when this comes into force on 1st April,” said Osborne recently. “Britain deserves a pay rise and this one-nation government is making sure it gets one, helping more people have the security of a higher wage to provide for themselves and their families.”

A significant promotional campaign is under way, and the government has created a website dedicated to the National Living Wage.

Will you benefit? Well, if you’re over 25, work in the UK and currently earn the minimum wage of £6.70, quite simply – yes. The move is designed to support hard working families who will also benefit from an increase in their personal allowance.

Several big name UK companies including National Express and Morrisons have already promised to pay at or above the new rate. Expect to see similar announcements from such businesses as we approach April.

*Imagery used is not owned by Personal-Debt.solutions and is for informational & educational use only. The information in this article is not endorsed by HM Government.

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