Per 1 April, the National Minimum Wage (NMW) and National Living Wage (NLW) rates have increased. This welcome increase was introduced to mitigate the effects of the cost-of-living crisis for low-income individuals.
Back in October 2022, the Low Pay Commission (LPC) extended its recommendations on increasing the NMW and NLW rates to the government. Within their report, they have included how the new rates will affect the economy as well as projections on future national earnings.
Although it has been increased, both the NMW and NLW are still below the real Living Wage. Additionally, the rising wages are also still slower than the rise in living costs across the UK.
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The New NMW and NLW Rates
It is described by the UK Government that the NMW rates are given to individuals of school-leaving age, while the NLW rates are given to individuals aged 23 and over.
As of early this month, the NLW has become £10.42 per hour. This is an increase of 9.7% or £0.92 from the previous rate of £9.50 per hour. The highest increase of £1.00 or 10.9% was seen on the 21-22 Year Old NMW rate, which has now become £10.18 from £9.18.
The full list can be seen below.
| NMW rate | Annual increase (£) | Annual increase (per cent) | |
|---|---|---|---|
| National Living Wage (23+) | £10.42 | 0.92 | 9.7 |
| 21-22 Year Old Rate | £10.18 | 1.00 | 10.9 |
| 18-20 Year Old Rate | £7.49 | 0.66 | 9.7 |
| 16-17 Year Old Rate | £5.28 | 0.47 | 9.7 |
| Apprentice Rate | £5.28 | 0.47 | 9.7 |
| Accommodation Offset | £9.10 | 0.40 | 4.6 |
The Real Living Wage and the Minimum Wage
This increase means that the NLW has become closer to the real Living Wage. However, the rates are still lower than the real Living Wage which is currently £10.90 per hour across the UK and £11.95 in London.
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Knowing this, it would mean that an individual earning the NLW would have to earn £1,000 extra per year to reach the real Living Wage. The gap between the NLW and real Living Wage is even more apparent for workers in London who will need to have an additional £2,570 to be aligned with the London Living Wage.
The LPC has estimated that the NLW should be further increased in 2024 to £11.43 to meet the UK Government’s target of two-thirds of median earnings.
With the cost of living crisis continuing to affect individuals across the UK, the rise in NLW and NMW has become a welcome change that does make a difference in providing daily needs and essential costs for individuals on low pay.