Two million workers will benefit when the National Living Wage rises to £8.21 on Monday (1 April), a date that will also mark the 20th anniversary of the minimum wage, according to the Resolution Foundation’s latest Earnings Outlook published today (Saturday).
The analysis shows that the latest rise in the National Living Wage (NLW) – applied to all workers aged 25 years and older – and the National Minimum Wage (NMW) will give a pay boost to around two million workers. The 38p an hour pay rise for a full-time worker on the NLW is worth around £750 a year.
The rise will particularly boost women’s pay packets – 1.2 million of whom will benefit – as they make up 60 per cent of all minimum wage workers. Around one in six part-time workers (1.2 million in total) will benefit. One-in-ten workers across the North East will also gain from the latest increase as the region has the largest proportion of minimum wage workers in Britain.
The analysis shows that almost half of the workers set to benefit from the latest rise work in just two sectors – hospitality, and wholesale and retail. Around one-in-four hospitality workers will benefit from the latest rise in the minimum wage, along with one in seven retail workers.
This latest pay rise also coincides with the 20th anniversary of the introduction of the National Minimum Wage. The Foundation says that from its cautious introduction, amid fears that it will lead to widespread job losses, the minimum wage has become one of Britain’s biggest ever policy successes for living standards.
Over the last 20 years, the minimum wage has risen from £3.60 an hour (£5.30 in 2019 prices) in April 1999 to £8.21 on Monday, without any significant effect on employment.
The number of people on the minimum wage has already grown rapidly – from just 3 per cent of workers in April 1999 to a projected 12 per cent of workers by April 2020 (3.3 million in total), according to the Foundation’s analysis. It says that the scale of minimum wage coverage today means that it now plays a fundamental role in the UK economy, and has created big labour market challenges, such as how workers progress out of low pay, alongside welcome annual pay rises.
The Foundation adds that after an exciting journey – and a controversial recent name change – over the last 20 years, the minimum wage is set to start a new phase after April 2020. That’s because the Chancellor has announced an ambition to eliminate low pay altogether, and launched a welcome review of minimum wages rates around the world, led by Professor Arin Dube.
Nye Cominetti, Analyst at the Resolution Foundation, said:
“The minimum wage is turning 20 on Monday, and its celebrating with a bang – a pay rise for two million workers. This policy, condemned as a jobs killer when it was first introduced, has turned out to be one of Britain’s biggest ever policy successes for living standards.
“Women and workers in retail and hospitality are most likely to benefit from the latest rise in the National Living Wage, as are workers in the North East.
“The National Living Wage is set for another big rise next year. The Chancellor is right to be signalling now where it should go after 2020. However, he should also ensure that the next phase of minimum wage rises are done so with the evidence carefully examined.”
Notes to Editors
- Around 85 per cent of workers currently on the wage floor are earning the National Living Wage, with the remaining workers on one of four National Minimum Wage rates.
- As well as the National Living Wage rising to £8.21 on 1 April, the following National Minimum Wage Rates will apply: £7.70 (21-24 year olds); £6.15 (18-20 year olds); £4.35 (under 18 year olds) and £3.90 (apprentices).
- Employees classed as low paid earn less than two-thirds of the median hourly wage, equivalent to approximately £8.70 today.