About 1.7 UK million workers will benefit when the national living wage (NLW) rises by 9.7% to £10.42 an hour on 1 April, according to a think tank.
The 92p rise to £10.42 an hour for workers aged 23 and over is equivalent to a near 10% increase, the Resolution Foundation said.
Workers currently earning up to 5p above the current minimum wage will directly benefit from the increase in the NLW, and potentially another five million low-paid workers will benefit indirectly from its ‘spillover’ effects as employers look to maintain differentials between pay bands.
The 92p rise in the legal wage floor workers aged 23 and over is the biggest annual cash rise in the 24-year history of the UK minimum wage, the think tank said.
“From tomorrow, millions of Britain’s lowest earners are set for a significant pay boost as the National Living Wage rises by almost £1 an hour. This latest rise isn’t just delivering a much-needed pay rise tomorrow, it has transformed earnings across Britain over the past quarter of a century – reversing rising pay inequality and halving levels of low pay,” Nye Cominetti, senior economist at the Resolution Foundation, said.
“But as well as celebrating the success of the National Living Wage it’s also important to understand its limits.
“Ultimately, continued progress on tackling low pay should be complemented by action to boost people’s hours and employment, as well as reforming our tax, benefit and housing systems. That’s only way to really get living standards up, and income inequality down,” he added.
Since its introduction in April 1999, when it was £3.60 for workers aged 22 and over, the minimum wage has transformed hourly pay inequality across Britain, the foundation said.
But it said inequality has remained high and largely unchanged, saying action on low pay must be complemented by wider drives on employment, taxes, benefits and housing costs if living standards for low and middle-income families are to rise.
The TUC said the minimum wage is going up less than inflation and food prices.
General secretary Paul Nowak said: “Everyone who works for a living deserves to earn a decent living, but tomorrow’s below-inflation increase to the minimum wage is not going to lift the pressure on hard-pressed families.
“A large chunk is going to be wiped out by soaring energy bills, and with food prices shooting through the roof, many low-paid workers will not see a positive difference in their spending power.
“It’s time to put an end to low-pay Britain. That means getting the minimum wage to £15 per an hour as soon as possible, and it means introducing industry-wide fair pay agreements so that all workers have a minimum set of pay and rights – starting with social care and the ferries sector.”
The Living Wage Foundation said 12,000 employers already pay the voluntary “real” living wage of £10.90 an hour and £11.95 in London.
A worker earning the statutory rate would need an extra £936 a year to bring their income in line with the voluntary figure, according to its research.
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