National living wage likely to rise by 5.7%

Posted on September 5, 2024 by admin

The move to increase 18-20-year-old rate of national minimum wage will begin from 2025 but will not be instant.

The Low Pay Commission has outlined a provisional plan for 2025 to begin raising the young persons’ rate of £8.60, in line with the government’s goal to eliminate age-based wage differences.

This aligns with the government’s objective to close the gap between the 18-20 rate and the National Living Wage (NLW). Businesses should also anticipate a significant increase in the main NLW, with early projections suggesting a 5.7% rise from the current £11.44 per hour to £12.10.

For the 2024-25 NLW, applicable to anyone over 21, the Commission has forecasted a possible range between £11.82 and £12.39, with £12.10 being the most likely, reflecting robust wage growth.

To further close the gap in April 2025, the 18-20 rate, currently at £8.60, will see larger increases compared to the NLW. The Low Pay Commission noted that, if current trends in prices and wages continue, a higher increase will be needed to maintain the “two-thirds bite,” exceeding inflation requirements.

The Commission will continue to gather evidence until it submits its final recommendations to the government by the end of October 2024. This includes considering impacts on businesses, competitiveness, the labour market, and the wider economy. The new rates will take effect from April 2025.

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