Your Wages Are Going Up – Here’s Why And What It Means For You
Last Updated on 8th October 2020 by Freddie Chirgwin-Bell
It’s the New Year for most of us, however, we still have a few months left in the financial year. Luckily, when April comes around there is going to be a brand new minimum wage and it’s leaping up!
The legal minimum wage was rebranded as the “national living wage” four years ago. The national living wage is to rise by 6.2% in what the government says is “the biggest cash increase ever”.
The rise is more than four times the rate of inflation and takes hourly pay for people over 25 to £8.72 from April.
Prime Minister Boris Johnson said: “For too long, people haven’t seen the pay rises they deserve.”
The Treasury said the increase equated to an increase in gross annual earnings of around £930 for a full-time worker on the current minimum rate.
The national living wage is the government-mandated minimum wage for over 25-year-olds. The minimum wage for under-25s will also rise.
What Should I Be Paid?
Although there are exceptions to who must be paid the national living wage, if you meet the following criteria you will are eligible.
You must be at least:
- school leaving age to get the National Minimum Wage
- aged 25 to get the National Living Wage – the minimum wage will still apply for workers aged 24 and under
Currently (January 2020) the national minimum wages look like this.
That means if you are 25 years or older then your paycheck should be £8.21 an hour or above. However, as each year goes on inflation and the cost of living increase. As of April 2020 your paycheck should equate to the following costs per hour:
Is this enough?
Whilst this rise has been applauded and welcomed by most, there are still criticisms about how it is not in line with the current cost of living.
The Living Wage Foundation is an independent charity that has calculated what the hourly rate of pay should be when compared against not only inflation but the current cost of living and a variety of other factors. This is what they call the “real living wage”
The Living Wage Foundation sets its “real living wage” at £9.30 an hour and £10.75 an hour in London. 6000 plus businesses including the insurer Aviva, the Nationwide building society and football clubs such as Crystal Palace are among those signed up to the voluntary scheme committed to paying the “real living wage” to more than 210,000 workers.
The business secretary, Andrea Leadsom, said the government would set out a future policy framework in the spring for raising the legal minimum pay level over the next five years, with the target being £10.50 and hour by 2024.
Katherine Chapman, Director of the Living Wage Foundation, said: “This announcement will be welcome news for low paid workers. There are still over 5 million workers in the UK earning less than the real Living Wage and many families will have struggled with extra costs over the holidays, so this increase in the minimum wage provides a vital pay boost.
“However, there is a still a gap between the government minimum and the Real Living Wage, independently calculated based on what it costs to live.”