Earlier this month, Chancellor Jeremy Hunt announced the 9.7% increase to the National Living Wage as part of his Autumn Statement to help workers cope with rising prices. The Statement revealed Hunt’s plans to try and pull the UK economy out of the ‘fiscal black hole’ it currently faces. Hunt explained how he had used ‘fairness and compassion’ when planning the statement, trying to find the balance between tax increases and spending cuts so that the UK’s poorest are not overwhelmed by the brunt of his changes. Amongst the plans, Hunt unveiled increases in the National Living Wage (NLW) and (NMW), based on recommendations from the Low Pay Commission (LPC).
In our latest blog, we discuss the upcoming changes to NMW and what this means for your business.
What are the changes?
The government has a commitment to making the NLW equal to two-thirds of median earnings for workers aged 21 and over by 2024. It’s thought that the upcoming increases to NMW will put the government in a good position to achieve this. The 9.7% increase in NLW will mean that workers aged 23 and older will receive an hourly rate of £10.42. Not only this, but workers across all NMW categories will see a wage increase (shown below), including a 10.9% increase for workers aged 21-22, meaning they will be paid an hourly rate of £10.18. The increase in NLW represents an increase of over £1,600 to the annual earnings of a full-time worker and is expected to benefit over two million low-paid workers. As the country faces a cost of living crisis these increased wages will be welcomed by those who receive them.
|Wage group||Current hourly rate (£)||Hourly rate from April 2023 (£)||Change (%)||Absolute change (£)|
|Age 23+ (National Living Wage)||9.50||10.42||9.7||0.92|
|Under 18 (but above compulsory school leaving age)||4.81||5.28||9.7||0.47|
What does this mean for my business?
The retail, care and hospitality sectors account for a large number of minimum-wage jobs, and this increase will be a relief to your employees. However, we understand that it may create challenges for your business, as it’s likely that you’ll need to re-evaluate your finances to account for the new cost of employment. The NMW outlines the lowest amounts a worker can legally be paid per hour, and employers who fail to pay this can be fined by HMRC. During a time when businesses are still facing the effects of the pandemic and are attempting to adapt to the ongoing cost of living crisis, we understand that these changes may create challenges for your business. With this in mind, employers should take the time to understand the changes to NMWs and the impact these will have on their operations, to ensure that they are not in breach of any rules.
How can we help?
If you would like further advice about how the changes to the National Living Wage and National Minimum Wages will impact your business, contact our team at email@example.com or call 0161 905 1616.