Minimum Wage 2021: what is the basic pay rate, when does it change - and how does UK Living Wage compare?
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Millions of UK workers on minimum wage are set to get an increase in their hourly rates of pay.
Chancellor Rishi Sunak pledged to protect jobs and livelihoods of the British people as the country emerges from the Covid crisis of the past 12 months.
Billions of pounds have been spent on various initiatives during the coronavirus pandemic, including the furlough scheme, at a significant cost to the public purse.
Mr Sunak announced further support for workers in his 2021 Budget, including a pay rise for employees on minimum wage - here’s what it means and when it will go up.
When will the minimum wage increase?
Workers on minimum wage can expect to receive an increase in the hourly rate paid by employers from 1 April 2021, under government plans.
How much is the minimum wage increasing by?
Rates of pay increase steadily from the age of 16 though different age related bands before reaching the top tier of earnings for those aged 23 and over.
The top rate of minimum wage was previously only available for workers aged 25 and over - this has been changed to those aged 23 and over from April 2021.
Pre-April 2021 minimum wage rates per hour:
Apprentices - £4.15
16-17 - £4.55
18-20 - £6.45
21-25 - £8.20
25 and over - £8.72
Mr Sunak confirmed the National Minimum Wage and the National Living Wage will increase for the 2021/22 financial year, during his Budget delivery.
The National Living Wage is what the government calls the basic hourly pay for workers in the top tier, who will be aged 23 and over when the new rates come in.
The new rates will see an hourly increase of 19p for the majority of workers in the top tier, with 23 and 24 year-olds benefitting from a 71p jump from April 2021.
The overall increases will benefit “around two million people”, said Mr Sunak.
Post-April 2021 minimum wage rates per hour:
Apprentices - £4.30
16-17 - £4.62
18-20 - £6.56
21-23 - £8.36
23 and over - £8.91
How does it compare to the UK Living Wage?
This is different to the UK Living Wage and the London Living Wage, which are both voluntary pay benchmarks employers can sign up to - though not legally required.
The UK Living Wage works out a fair minimum rate of pay based on the costs of everyday needs, like food, rent and including utility bills, campaigners say.
The Living Wage Foundation, an independent organisation, which assesses the minimum wage required to live off says the UK’s real living wage is £9.50, or £10.85 for London.
Since 2011, the Living Wage movement has delivered a pay rise to over 250,000 people and put over £1.3 billion extra into the pockets of low paid workers.
What has the government said about the National Minimum Wage and National Living Wage increase?
Prime Minister Boris Johnson said: “The National Minimum and Living Wages have increased every year since they were introduced, supporting the lowest paid, and despite the challenges we’ve faced recently, this year will be no different.
“That’s why we’re providing a well-earned pay rise to two million people, which will be a welcome boost to families right across the UK.
“To make sure the next generation isn’t left behind, everyone over 23 years old will also now be eligible.”
Business Secretary Kwasi Kwarteng said: “In this toughest of years, we’re protecting workers by putting more money in the pockets of the UK’s lowest paid.
“To support our next generation of workers, we’ve also lowered the age threshold for the Living Wage to 23, ensuring even more people have the security of a decent wage.
“This increase will help millions of families in every corner of the country, while supporting businesses as we prepare to safely reopen our economy and build back better from the pandemic.
And added: “I’d urge all workers to check their pay packet to ensure they’re getting what they are entitled to, and remind employers of their duty to pay the correct wage.”
What has been the response to the National Minimum Wage and National Living Wage increase?
Though any increase in pay tends to be welcomed by workers, campaigners and unions claim the bump doesn’t go far enough.
Laura Gardiner, director of the Living Wage Foundation, said: “The introduction of the National Living Wage has delivered a solid pay rise to minimum wage workers, and it’s welcome to see the Government continuing to commit to ambitious increases.
“However, there is still a substantial gap between this wage rate and one based on the cost of living, with National Living Wage workers falling billions of pounds short of a real Living Wage over the past five years.
“The number of employers signing up to the Real Living Wage has continued to grow, even during the pandemic, as businesses recognise the benefits of a healthy and motivated workforce.”
TUC general secretary Frances O’Grady said: “Those expecting a decent pay increase today have been let down by the Government’s decision to row back on the full rise they were promised.
“TUC analysis shows that one in three key workers earn less than £10 an hour. This can make it tough for them to pay bills and put food on the table.
“Ministers must get the minimum wage up to £10-an-hour to stop millions of working people from living in poverty.”