National Minimum Wage Increase: Minimum Wage For 23 Year-Olds Hits A New High!

Chancellor Rishi Sunak announced within the Autumn Budget on Wednesday 27th October that the National Living Wage for workers aged 23 and over will increase from £8.91 per hour to £9.60 per hour from 1st April 2022.

This calculates to an increase of 59p, or if you work full-time, you’ll earn an extra £1,074 per year before tax.

Defined by the government in 2015, the national living wage is the lowest amount of money that can legally be paid to employees aged 23 or over. The wage rise is reviewed every April, and this year the age at which workers become eligible has been reduced from the age 25 to 23.

The 6.6% increase in the minimum pay rate for those aged over 23 is more than twice the current 3.1% rise in the cost of living after recommendations made by the Low Pay Commission.

Not only ages 23 and over will benefit from this increase, but for people aged 21-22, the minimum wage will rise from £8.36 to £9.18 an hour, and the Apprentice Rate will increase from £4.30 to £4.81 an hour.

Chancellor Rishi Sunak exclaimed the increase “ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament”.

However, Bridget Phillipson, Labour’s Chief Secretary to the Treasury, described it as an “underwhelming offer” that will be swallowed up by tax rises, universal credit cuts and higher energy bills.

• National Living Wage for ages 23 and over: From £8.91 to £9.50 an hour
• National Minimum Wage for those aged 21-22: From £8.36 to £9.18 an hour
• National Minimum Wage for ages 18-20: From £6.56 to £6.83 an hour
• National Minimum Wage for under-18s: From £4.62 to £4.81 an hour
• The Apprentice Rate: From £4.30 to £4.81 an hour

BBC News released a personal account from Finn Oldfield, 23, who earns the National Living Wage for his communications job at the People’s Powerhouse social enterprise.

Currently living at home with his parents in Widnes, Finn said the increase would help him move to Liverpool city centre, which was unaffordable before the increase.

“It’s hard if you’re from a regional town. I have a politics and philosophy degree from Edinburgh University and thought I’d be able to find opportunities,”

After graduating last year in the middle of the pandemic, Finn found his role through the government’s Kickstart scheme, which encourages six-month jobs with businesses for people aged 16-24 who are currently claiming universal credit.

“With no rent control and higher energy prices, I think this will offset perhaps the harshest of the blows that have come, but I think there’s more that could be done by the government to help with rising everyday costs.”

Differing points of view have been expressed in response to the wage boost, including the CEO of Scottish Trust Deed, David Baddeley;

“For millennials wondering how to pay for the rise in costs of food, gas, national insurance, childcare, petrol and rail fares, today’s budget offered little comfort.

The government ended furlough this month, just when, arguably, households who are just about managing needed it the most. The National Minimum Wage going up to £9.50 per hour isn’t much higher than inflation, and saving a few pence on the occasional pint of beer won’t be enough to help those who will be choosing eating or heating this winter”.

Rich Horner, Head of Individual Protection at MetLife also commented;

“Today’s announcement by the Chancellor that minimum wage will rise to £9.50 an hour is certainly a step in the right direction and will, in practice, help millions of workers across the UK who have been exposed to the full financial effects of the Pandemic. But consumers are still in for a difficult time. Recent tax rises to national insurance, soaring inflation, and an energy crisis, on top of continued job insecurity will leave workers struggling to get on top of their monthly outgoings and build that all-important financial safety net. Our own research found that one in five (19%) UK adults – equivalent to more than 10 million adults – say they are not financially resilient. Meaning they wouldn’t be able to manage their situation on their own without taking out a loan or using a credit card.

The combination of worrying about having no disposable income and not having any savings to fall back on can have a significant impact on a person’s mental health and can leave them feeling financially vulnerable. We need to support and encourage people to understand, and regularly review, what solutions are out there to support them every day. Becoming financially resilient doesn’t happen overnight, even if you do get a pay rise, but putting the right protection in place can help you to feel more confident that you have the support you need should the unexpected happen.”

Laura Kearsley from Nelsons added;

“Although the increase has generally been welcomed, there are people under the age of 23 who have criticised the fairness of being paid less for doing the same job as someone older than them. While, historically, there has always been a disparity, now would be the perfect time to reconsider this, given the fact that UK job vacancies have hit a record high of 1.1 million, according to the Office for National Statistics (ONS), meaning that many employers are hiring, regardless of age, to fill the gaps left by staff shortages.”