What is the National Living Wage? Basic pay rate and how National Minimum Wage and UK Living Wage compare

The Autumn Budget 2021 is expected to bring with it welcome news for workers on minimum wage

The Autumn Budget 2021 is expected to bring with it welcome news for workers on minimum wage. (Pic: Getty)

Workers on minimum wage are set for a rise in their hourly pay.

The increase to the National Living Wage - the basic pay rate for workers aged 23 and over - was confirmed in the Autumn Budget 2021.

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Government ministers had said to be mulling over a National Living Wage rise amid increased cost of living, with inflation high and national insurance contributions set to be raised.

Energy bills continue to soar amid rising wholesale gas prices and the cost of food and petrol is up ahead of the UK’s winter months which put greater demand on these goods and services.

Here’s all you need to know about the National Living Wage - from the basic hourly rate of pay increase to how it compares to the National Minimum Wage and the UK Living Wage.

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, from April 2021.

It saw 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.

Ministers have been reluctant to increase the minimum wage for fears that it would prompt employers to reduce their staff to cover costs.

How much is the National Living Wage increasing by and when?

The National Living Wage will rise by as much as 6.6% from April 2022, once confirmed in the Autumn Budget 2021.

It will see an increase of 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 follows 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, who will also get a rise from 1 April 2022.

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

What is the UK Living Wage?

The UK Living Wage is a voluntary pay benchmark, along with the London Living Wage, which employers can sign up to, but are not legally required to do so.

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 £9.90, or £11.05 for London.

The rate of increase for National Living Wage workers aged over 23 is more than twice the current rise to the cost of living, and will mean a full time worker will get an extra £1,074 a year before tax.

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