Chancellor Jeremy Hunt has announced that he is set to raise the UK’s national living wage (NLW) in April 2024. The current NLW is £10.42 an hour, which is said to be increasing to over £11 an hour. According to the press release by HM Treasury, this increase will reflect a pay boost worth £1000 for 2 million workers.
This announcement was first made by Mr Hunt at the Conservative Party Conference in Manchester. He said, in his announcement, that since the National Living Wage has been introduced, it has helped lift nearly 2 million people from absolute poverty. He further adds, “We promised in our manifesto to raise the national living wage to two-thirds of median income – ending low pay in this country.”
Mr Hunt says that this boost means full-time workers on NLW are now better off by over £9000 when compared to workers in 2010.
What is The National Living Wage and How Does It Differ from the National Minimum Wage?
Both the National Minimum Wage (NMW) and NLW are described as the minimum legal amount that someone can be paid for work. While in both cases the amount depends on the age of the person, the main difference between the two is that NMW is for people below 25 and NLW is for people over 25.
The UK always had NMW which was subject to change based on the advice of the Low Pay Commission. However, the NLW was only introduced in 2016. Upon introducing the NLW, targets were set by the government that would help reduce low pay. The NLW target for 2020 was met and now the new target is to reach two-thirds of the median earnings by 2024.
NLW May Fall Short of The Real Living Wage
The real Living Wage is described as the only UK wage rate based on the cost of living, by the Living Wage Foundation. It is not a legal requirement and is being voluntarily paid by many businesses in the UK. At present, the current living wage is £10.90 across the UK and £11.95 for London.
The rates are calculated based on the living costs which include rent, travel costs, food etc., while keeping the cost of living in mind. Since London is more expensive than other cities in the UK, the living wage is slightly higher as well. New living wage rates will be announced on the 23rd of October by the Living Wage Foundation and employers will be given 6 months to implement them.
Director of the Living Wage Foundation, Katherine Chapman, says that while the rise in the NLW is welcome, it will still fall short of the real living wage next year since the new living wage rates will also increase. She further adds, “Our research showed that 60% of people earning below the real Living Wage had used a food bank in the past year and nearly 40% were regularly skipping meals.”
Increased Opportunities for Home Working
In addition to the announcement about the living wage, Mr Hunt also wants to encourage people to get back to work. According to him, COVID has set things in the wrong direction and people are leaving the workforce to live off benefits.
Work and Pensions Secretary Mel Stride said that they are looking into ways to create increased opportunities for home working. The government is also planning on assessing how much a person’s illness or disability prevents them from working, and if they are fit to work, their benefits will be withdrawn.
According to Mr Hunt, this is just a matter of fairness as people who don’t even look for work should not have the same benefits as people who are trying to do the right thing. Mr Hunt and Ms Stride plan on proposing a way to make it harder for people to claim benefits if they aren’t actively looking to work, in their November statement.