As many as 2.5 million UK workers will receive a pay boost from Friday as the national minimum wage and national living wage (NLW) rates increase.
The hike consists of a pay rise of £1,000 ($1,311) a year for full-time workers, and is the largest ever uplift to the NLW for Brits ages 23 and over, who will now earn 6.6% more at £9.50 an hour.
Last year, the age threshold for the rate moved from age 25 to 23, meaning that more young workers are now eligible for a higher wage.
It also means that the annual earning of a full-time worker on the national living wage will have now increased by over £5,000 since its introduction by the UK government in April 2016.
Workers in the retail, hospitality, and cleaning and maintenance sectors will benefit in particular, the department for business, energy and industrial strategy said.
Apprentices will also get a large 11.9% increase to their minimum hourly pay, with 21- to 22-year-olds seeing an immediate 9.8% rise.
However, it comes as a small relief to UK consumers who are facing the biggest cost of living squeeze in 60 years amid rising energy bills, as well as clothing, food and fuel costs.
As of Friday, UK household energy bills have risen £693 to £1,971 in April as the energy regulator Ofgem announced a 54% energy price cap increase amid soaring oil and gas prices.
“We have never been more determined to make work pay, and by providing the biggest cash increase ever to the national living wage from today, we are giving a boost to millions of UK workers,” business secretary Kwasi Kwarteng said.
“While no government can control the global factors pushing up the cost of everyday essentials, we will absolutely act wherever we can to mitigate rising costs.
“With more employees on the payroll than ever before, this government will continue to stand up for workers.”
The increases follow recommendations made to the government by the Low Pay Commission in the autumn.
Bryan Sanderson, chair of the Low Pay Commission (LPC), said: “Minimum wage workers across the United Kingdom continue to play a vital role in ensuring a strong post-pandemic economic recovery.
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“In previous years the LPC has sought to keep increases to the minimum wage above inflation. However, inflation is now expected to be higher than the forecasts we had when we made our recommendations last October.”
He added: “While today’s NLW increase of 6.6% gets us back on track to reach the 2024 target of two-thirds of median earnings, it will unfortunately likely be a real terms cut.”
The current number of British employees on the payroll is over 600,000 more than pre-pandemic levels, while unemployment has fallen to 3.9%.
The new national minimum wage and national living wage rates are both statutory minimums, and businesses are encouraged to pay workers above these whenever they can afford to do so.
Recent studies show significant benefits for employers who pay their staff higher wages, which includes higher job retention and staff productivity.
With the rates going up from today, workers across the UK are being urged to check they are being paid properly. This can be done by visiting the Check Your Pay website, which also offers advice on what to do if you are being underpaid.