What is the National Living Wage 2022? Rate explained, will it increase - National Minimum Wage comparison

The autumn statement 2022 saw Jeremy Hunt make an announcement about the basic hourly pay rate for UK workers amid the worst cost of living crisis for decades

The UK National Living Wage is set to go up after an announcement made in Jeremy Hunt’s autumn statement speech.

While the budget speech saw what were effectively tax rises for many UK workers, the Chancellor of the Exchequer also introduced targeted support measures in a bid to help the poorest and most vulnerable households with the cost of living crisis.

It comes after inflation increased to yet another record high in October 2022. At the same time, it was revealed wages were being squeezed and unemployment was on the rise.

The National Living Wage - which is not to be confused with the Real Living Wage - was previously increased by then-Chancellor Rishi Sunak in the autumn budget 2021.

But how much will it rise by now - and how does it compare to the National Minimum Wage? Here’s what you need to know.

Reports suggest Jeremy Hunt will raise the rate in his autumn statement 2022 (image: AFP/Getty Images)

What is the National Living Wage?

The National Living Wage (NLW) is the basic hourly rate of pay for workers aged 23 and over in the UK.

It was at £8.91 an hour having been increased in the Spring Budget 2021. At the same time, the age threshold for workers on the National Living Wage reduce from 25 to 23, meaning 23 and 24 year olds received a 71p hourly rise.

But from April 2022, it increased by another 59p from £8.91 an hour to £9.50 an hour for workers over the age of 23 who are on the minimum wage bracket. It followed recommendations from a panel of independent advisers on the Low Pay Commission.

How does the National Living Wage compare to the National Minimum Wage?

The National Living Wage is essentially the minimum wage earned per hour by workers aged 23 and over in the UK. The National Minimum Wage is the phrase used for basic pay rate workers up to the age of 22 in the UK.

They also got a rise from 1 April 2022.

  • Workers on the Apprentice Rate increased from £4.30 to £4.81
  • National Minimum Wage workers under the age of 18 got a rise from £4.62 to £4.81
  • The National Minimum Wage rate for 18 to 20 year olds increased from £6.56 to £6.83
  • National Minimum Wage for workers aged 21-22 rose from £8.36 to £9.18

What is the Real Living Wage?

The UK Real Living Wage is a voluntary pay benchmark, along with the London Living Wage, which employers can sign up to. So, they are not legally required to pay the rate.

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, the organisation that runs it - the Living Wage Foundation - says.

Rishi Sunak’s time as Chancellor was dominated by the Covid-19 pandemic and the cost of living crisis (image: Getty Images)

It recently increased its rate in a bid to better reflect the cost pressures faced by workers during the cost of living crisis. In line with the 10.1% increase seen in the July CPI, employers will pay out £11.95 an hour for London workers (London having a higher cost of living), with everyone else in the UK getting £10.90.

Will National Living Wage increase?

In advance of the autumn statement, several media reports had predicted a National Living Wage rise was on the cards. Jeremy Hunt confirmed the move in his budget speech - albeit at a more generous rate than had been expected.

The government is set to increase the National Living Wage - the legal minimum wage - from £9.50 an hour to £10.42 an hour. This rise amounts to an increase of 9.7%, which is still short of the current rate of inflation, but in line with recommendations made by the Low Pay Commission.

Hunt said the change would help around two million workers, providing £1,600 extra for the average full-time worker. However, the change will not come in until April 2023, meaning workers still face the prospect of getting through the winter months with a deepening real-terms wage cut.