National Living Wage Increases – What you Need to Know
Real wage growth remains a genuine bone of contention in the UK, not least because of conflicting reports that have been released by the government. So, whilst it was claimed in 2018 wages were rising at the fastest pace in three years, this referred to regular salaries only and failed to factor in inflation or tax liabilities.
However, real wages did grow slightly by 0.2% in the three months ending July 2018, and this represented the joint-fastest pace in 18 months. Not only this, but the government has since announced an increase in the so-called National Living Wage, which was introduced in 2015 to ensure that even entry-level employees are paid a viable salary throughout the UK.
In this post, we’ll explore the latest pay hike and ask who’s likely to benefit the most from this increase.
The National Living Wage Hike – What do we Know so far?
According to most sources, around 1.8 million workers currently earning the National Living Wage (NWL) in the UK will receive an additional £690 in the financial year ending March 2020.
This significant increase was announced last year and came into effect on Monday, April 1st, whilst the biggest NWL hike to have taken place since the measure was first bought into effect more than three years ago.
As part of the same initiative, the National Minimum Wage (NMW) has also increased to £7.70 per hour for those aged between 21 and 24. This will translate into an additional £580 per annum for people who work full-time, whilst anyone aged between 18 and 20 will see their pay packet increase by £455 during the course of the year.
When considered alongside the hike in the NLW and further changes to the apprentice salaries and accommodation offsets, it’s estimated that a little over two million people will
receive a pay increase from this month onwards, with those who work in the hospitality and retail sectors likely to benefit the most.
How will this Impact on People in the UK?
This will deliver a huge boost to anyone earning the NLW or the NMW, as the government provides their finances with a significant shot in the arm as Brexit continues to loom large on the horizon.
In more specific terms, anyone who is earning the average national wage and continuing to repay their student loan will see their take-home pay increase by around £217.21 over the course of the year. This increase will also benefit households that are struggled to repay an existing debt burden, particularly when combined this type of managed bank account that offers direct budgetary assistance.
When it comes to percentage changes, it’s actually apprentices who will benefit the most from the recent legislative changes. Youngsters employed under the terms of an apprenticeship will see their pay increase from £3.70 per hour to £3.90, for example, with this amount rising by 7.9% as of April 1st.
Overall, the NLW has increased by a healthy 4.9%, whilst the minimum wage for those aged between 21 and 24 will benefit from a 4.3% pay rise over time.
Conversely, youngsters at the lower end of the minimum wage will take home around 4.2% more during the next financial year, whilst also benefitting from additional tax changes and shifting thresholds.