National Living Wage To Rise In April 2020, But Is It Enough?

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January 23rd 2020
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National Living Wage To Rise In April 2020, But Is It Enough?

The national living wage for people over 25 is to rise by 51 pence. How does this compare to previous years, inflation and the real living wage?

The national living wage is set to be increased from April 1st 2020.

The Conservative government renamed the minimum wage from April 2016 to the 'National Living Wage' which does create some confusion with the 'Living Wage Foundation'.

Below are the full new rates showing the new rates compared to the previous year, as well as the Living Wage foundation (2019) recommendations:

National Living WageNational Minimum WageLiving WageLondon Living Wage
YearAge25+21-2418-20Under 18Apprentice18 and over18 and over
2020£ per hour£8.72£8.20£6.45£4.55£4.15£9.30£10.75
2019£ per hour£8.21£7.70£6.15£4.35£3.90£9.30£10.75

The government claims that the lowest paid employees will get a pay rise of up to £930 (6.2 percent), which is the highest single year increase. Three million people are in this bracket and set to benefit.

They also claim that the rise means that low paid employees have seen increases over £3,600 since 2016. However, inflation would reduce that figure in real terms. Head on over to our Salary Inflation Calculator to see how pay after and before tax compares when inflation is thrown into the mix.

During the election pledges both Labour and Conservatives included a pitch for the minimum wage in their manifestos. The Conservatives said they would raise the minimum wage to £10.50 by 2024 and Labour said they would raise the minimum wage to £10 an hour immediately and to include people under eighteen.

The government is planning to add new bands to the living wage so that rather than a blanket over-25's band, there will be new spans for people ages over 23 (from 2021) and over 21 (by 2025).

We previously reported on an American study on minimum wages to show how rises can affect employment figures. The study found that the living wage could be increased to around £9.32 an hour or £17,500 per year without detrimental affects. The figure interestingly matched the current optional figure set by the 'Living Wage Foundation' of £9.30. 6,000 employers adopt the guidance of the 'Living Wage Foundation' in the UK.

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