/More than 3,000,000 will get a pay rise in the new year

More than 3,000,000 will get a pay rise in the new year

Pound coins and notes in British sterling
The rise takes hourly pay for people over 25 to £8.72 from April (Picture: PA)

The ‘biggest ever’ increase in the national living wage will see almost three million workers get a pay rise in 2020.

From April, those on minimum wage will get a pay rise from £8.21 to £8.72 an hour for people over 25 from April.

The rise of 6.2% is more than four times the rate of inflation and will benefit millions of low-paid workers, the government has said.

Prime Minister Boris Johnson praised the hike in pay and said: ‘For too long, people haven’t seen the pay rises they deserve.’

But businesses have warned that the above-inflation increase would ‘pile further pressure’ on cashflows and leave employers unable to cope.

The British Chambers of Commerce has urged the government to reduce costs elsewhere for firms.

According to data from the independent Low Pay Commission, the 51p increase in the national living wage to £8.72 from £8.21 is the largest since the rate was introduced in April 2016.

Image ??Licensed to i-Images Picture Agency. 13/12/2019. London, United Kingdom. Boris Johnson Election Night. Britain's Prime Minister Boris Johnson and his partner Carrie Symonds watch the 2019 Election results on the TV in his study in No10 Downing Street. Picture by Andrew Parsons / i-Images
Boris Johnson has praised the pay rise (Picture: i-Images)

The previous biggest increase was in April 2016, when the rate rose by 50p from £6.70 to £7.20 per hour.

The national living wage is the name for the minimum wage level payable to adults over the age of 25.

Those under the age of 25 and apprentices are paid at a lower rate.

Younger workers who receive the minimum wage will see their pay boosted between 4.6% and 6.5% depending on their age, with 21 to 24-year-olds seeing a 50p increase from £7.70 to £8.20 an hour.

But Hannah Essex, co-executive director at the British Chambers of Commerce, said the pay increase came at a difficult time for businesses and that many companies ‘have struggled with increased costs in a time of great economic uncertainty’.

She said: ‘Raising wage floors by more than double the rate of inflation will pile further pressure on cashflow and eat into training and investment budgets.

‘For this policy to be sustainable, government must offset these costs by reducing others, and impose a moratorium on any further upfront costs for business.’

What will the new national living wage be?

From April 2020:

  • National Living Wage for 25 and over – up 6.2% to £8.72
  • National Minimum Wage for 21-24 – up 6.5% to £8.20
  • For 18-20 year olds – up 4.9% to £6.45
  • For under 18s – up 4.6% to £4.55
  • For apprentices – up 6.4% to £4.15

Mr Johnson said it will be the ‘biggest ever cash boost to the national living wage’, which was announced by Chancellor Sajid Javid in September.

He added: ‘Our government will put a stop to that, giving nearly three million people from Edinburgh to Eastbourne a well-earned pay rise, including the biggest ever cash boost to the national living wage.

‘But that’s not all. As we enter a new decade, we’re setting our sights higher, to help people earn more over the next five years and level up access to opportunity across our great country.’

The new rate starts on April 1, 2020, and results in an increase of £930 over the year for a full-time worker on the national living wage.

Nye Cominetti, an economic analyst at the Resolution Foundation think tank, welcomed the increase but warned it is ‘not risk-free’.

He said: ‘It should be matched by a renewed commitment to swiftly evaluate evidence of the impact of such large and sustained minimum wage rises – and acting on that evidence if problems emerge.’

In September, when the Chancellor first announced the increase, he said the national living wage would rise towards two-thirds of median earnings by 2024, ‘provided economic conditions allow’, to about £10.50 per hour.

Frances O’Grady, general secretary of the Trades Union Congress, said a £10 per hour national living wage is needed now as ‘in-work poverty is soaring’.

She added: ‘No more excuses, working families need a £10 minimum wage now, not in four years’ time.’

Britain's Chancellor of the Exchequer Sajid Javid delivers a statement at The Treasury in London, Friday December 20
Chancellor Sajid Javid has been told to increase the living wage to £10-an-hour now (Picture: AP)

Craig Beaumont, Federation of Small Businesses director of external affairs and advocacy, urged the Government to implement pro-business measures ahead of the next financial year.

He said: ‘This government has promised a reduction in the jobs tax through an increase in the employment allowance.

‘With a national living wage increase of this size now on the horizon, it’s critical that it delivers swiftly, particularly with small business confidence plumbing new depths ahead of the election.

‘We need this support announced in good time ahead of April’s increase so small businesses can plan ahead.’

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