What is the minimum wage? Amount expected to raise by 6% in 2025

As part of the incoming Autumn Budget 2024, it is expected that the NMW will be hiked by six per cent as of 2025 – which would see more than one million workers in low-paid jobs get a boost to their pay packets.

The rise would be an increase above inflation and higher than previous predictions.

The changes would mean around 1.6 million people would be in line to receive the “national living wage” of £11.44 an hour, the minimum wage for those 21 and over – rising to more than £12.12 after ministers promised to “raise the floor” on wages.

But workers could end up with less of a boost as the changes are expected to be announced in line with another change – a rise in the amount of National Insurance contributions.

Speaking to the Guardian, Nye Cominetti, the principal economist at the Resolution Foundation, said: “Millions of low earners are set for good news in the budget when the chancellor announces the latest rise in the minimum wage.

“A bigger surprise is the expected increase in employer National Insurance contributions. As a result of the two together, some businesses will legitimately say that their wage costs have gone up quite a bit as a result of this budget.”

Paul Nowak, general secretary of the TUC, added: “At a time when the cost of living is still very high, the lowest paid would really benefit from a decent increase in the minimum wage. We know that low-paid workers spend more of their cash in their local economies. So any increase in their spending power will benefit local firms, too.”

He added: “Every time the minimum wage goes up, there are some voices who predict this will drive up unemployment. Every time they are wrong.”

The Minimum Wage – the full title of which is the National Minimum Wage (NWM) – refers to the legal lowest amount that UK employers must pay their workers per hour of work. It is a statutory requirement set by the Government to ensure that workers receive a fair and reasonable level of pay. 

The Minimum Wage aims to protect workers from exploitation and ensure they receive an income that covers basic living standards.

The NWM rates in the UK are typically differentiated based on factors such as workers’ age and whether they are an apprentice. These rates are periodically reviewed and adjusted by the Government to reflect changes in living costs and other economic considerations.

The rates are decided each year by the Government, based on the advice of the LPC. 

Each year, the LPC advises the government on what rates the different minimum wages in the UK should be. It is then up to the Government to accept or reject the LPC’s recommendations.

As of April 1, 2024, the rates are:

The real living wage is an hourly rate based on the basic cost of living in the UK. But, unlike the legally enforceable national minimum wage, whether or not to pay the real living wage is a voluntary decision for an employer.

The London living wage (LLW) is a voluntary hourly wage rate that is calculated independently by the Living Wage Foundation. It is designed to reflect the higher cost of living in London compared with other parts of the UK. The LLW is not a statutory requirement, but many employers in London choose to pay their workers this higher rate as a commitment to fair pay.

The Living Wage Foundation calculates the LLW based on the actual cost of living in London, taking into account factors such as housing, transport and other basic expenses. The LLW is intended to provide workers with a wage that allows them to cover their essential needs and maintain a decent standard of living in the capital city. The exact amount of the LLW can vary and is updated annually. You can check future amounts on this website.