What is the minimum wage?
The minimum wage is the minimum amount of pay that an employer is legally required to provide to an employee for their work. The National Minimum Wage in the UK is set by the government and varies based on age and apprenticeship status.
In the UK, the minimum wage is divided into two key wage rates:
The National Living Wage (NLW) for those aged 23 or over
The National Minimum Wage (NMW) for those under 23 (or apprentices)
What is the National Minimum Wage?
TheNational Minimum Wageapplies to anyone between the ages of 16-22 (or who is in their first year of an apprenticeship).We can understand it as the step before the National Living Wage. Most importantly, the National Minimum Wage is set by age.
What is the National Living Wage?
The National Living Wage is a UK wage scheme designed to be higher than the minimum wage. It applies to all workers aged 23 and up (who are not in the first year of an apprenticeship).
The National Living Wage is essentially the minimum wage standard for the vast majority of UK workers. Every year on the first of April, the National Living Wage changes.
From 1 April 2023 onward, the NLW rate stands at£10.42perhour.
What is the London Living Wage?
The London Living Wage is a project, championed by the Mayor of London, for employers to voluntarily pay a higher standard of the National Living Wage for workers in the capital.
The London Living Wage is currently £13.15 an hour.
Why does the UK minimum wage keep increasing?
There's a host of reasons to increase the minimum wage in the UK. The main reason is to assist workers in keeping up with the cost of goods, as per inflation, to help people essentially make ends meet. Increases, in line with inflation, are designed to help fight against poverty and help foster more economic security.
How many UK workers get paid the minimum wage?
Estimates suggest that the total number of jobs paid, within five pence of the minimum wage, will rise to 2 million works as of 1 April 2023. This is an increase of around 400,000, suggesting that 1.6 million were paid the minimum wage in 2022.
What is the 2024 minimum wage in the UK?
As of the 21st of November, and taking effect on April 1, 2024, the new National Living Wage in 2024 will rise to £11.44. This is higher than the initial projections made by the Low Pay Commission (LPC) that suggested it would rise to £11.16.
Rate | 2023 Rate | 2024 Rate | Increase |
|---|---|---|---|
National Living Wage | £10.42 | £11.44 | 9.8% |
18-20 Year Old Rate | £7.49 | £8.60 | 14.8% |
16-17 Year Old Rate | £5.28 | £6.40 | 21.2% |
This signifies the largest increase in the minimum wage in cash terms and the first time it has increased by more than £1.
How is the minimum wage for 2024 calculated?
The minimum wage is primarily based on the UK Government's target for the minimum wage to hit two-thirds of median earnings by 2024.
Due in part to emerging from the pandemic, many feared that a potential economic slowdown would need to be bolstered by increased wage growth. This led to a larger increase on the minimum wage in 2023, to help "push us" out of the pandemic faster.
The size of this current increase is driven by the strength of pay growth across the economy (forecasted to continue into 2024).
What was the UK minimum wage for 2023?
As of 1 April, 2023, the UK minimum wage has increased. As of this moment, the National Living Wage will consist of an hourly rate of £10.42. Additionally, the rate for 21-22 year olds will be £10.18, for 18-20 year olds £7.49 and for 16-17 year olds it will be £5.28.
You can find the changes, alongside their percentage increases, below:
Rate | 2022 Rate | 2023 Rate | Increase |
|---|---|---|---|
National Living Wage | £9.50 | £10.42 | 9.7% |
21-22 Year Old Rate | £9.18 | £10.18 | 10.8% |
18-20 Year Old Rate | £6.83 | £7.49 | 9.6% |
16-17 Year Old Rate | £4.81 | £5.28 | 9.7% |
How did the UK minimum wage change in 2023?
The minimum wage for UK workers in 2023 is increasing by approximately 9.7%, 10.8%, 9.6% and 9.7% (dependant on age). This is based primarily on advice from the Low Pay Commission (LPC). Overall, the increases are designed to help workers and families continuing to fight continued issues caused by the cost of living crisis.
Why did the UK minimum wage change?
Changes to the National Minimum Wage were made following recommendations by theLow Pay Commission (LPC). Their intent is to support both the wages and living standards of low-paid workers across the UK, and are designed to be in line with the general trends of the wider economy.
What was the UK minimum wage in 2022?
In 2022, the UK minimum wage also saw increases across each relevant age range. That included increases for 16-17-year-olds (£4.81with a4.1%increase), 18-20-year-olds (£6.83with a4.1%increase) and 21-22-year-olds (£9.18with a9.8%increase).
Rate | Previous Rate | 2022 Rate | Increase |
|---|---|---|---|
National Living Wage | £9.50 | £9.50 | 6.6% |
21-22 Year Old Rate | £8.36 | £9.18 | 9.8% |
18-20 Year Old Rate | £6.56 | £6.83 | 4.1% |
16-17 Year Old Rate | £4.62 | £4.81 | 4.1% |
How is the National Minimum Wage calculated?
The National Minimum and Living Wages are negotiated settlements based on recommendations from businesses and trade unions.
What is the National Living Wage's real value?
Set against the backdrop of the cost of living crisis, many UK workers wonder if the minimum or living wage is able to keep up with the cost of goods. In fact, since 2015 the minimum wage has trended higher than inflation.
Since April 2021, the real value of the National Living Wage has trended lower, month over month, due to the cost of living crisis. That said, since the increase as of 1 April 2023, we will hopefully see a reversal of this trend.
While it is impossible to predict the future, current estimates project a stabilisation in prices for the remainder of 2023 into 2024. This could lead to a re-levelling of the real value of the National Living Wage (and relief for many workers).
Who is entitled to the National Minimum Wage?
Both the National Living Wage and National Minimum Wage apply to all workers in the UK. It mainly varies based on age (and apprenticeship status). But, even part-time labourers, casual workers and anyone else providing work in the UK are entitled to receive a minimum wage of some amount.
Who does not qualify for the National Minimum Wage?
The National Minimum Wage in the UK does not apply to those who are self-employed, working on a volunteer basis and family members who share a common residence as their employer and complete household chores.
What is the Apprentice Rate?
The apprentice rate only applies to people under the age of 19, or who are over the age of 19 but are subsequently in the first year of an apprenticeship. The apprentice rate for 2022 was£4.81, and the rate for 2023 will be £5.28. If apprentices are both over the age of 19 and no longer in their first year, they are entitled to their relevant minimum wage.
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What is the Real Living Wage?
Introduced as a voluntary wage scheme in the UK, theReal Living Wageis paid by over 10,000 employers in the UK (including Nationwide, Google, Everton FC and Chelsea FC). It is currently£12.00in the UK and£13.15in London.
Was There A Change in the Real Living Wage?
As of 24 October 2023, the Real Living Wage has seen an increase (year-over-year) and now sits at £12.00in the UK and£13.15in London. This will extend to 460,000+ workers who are currently paid across 14,000+ employers.
UK Wage Rates Compared
National Minimum Wage | National Living Wage | Real Living Wage |
|---|---|---|
Statutory | Statutory | Voluntary |
£10.18 | £10.42 | £12.00 |
21 and older | 23 and older | 19 and older |
Minimum Wage Rates Compared
As of 1 April 2023, the following minimum and living wage rates apply in the UK:
Minimum Wage Type | Latest Amount |
|---|---|
National Living Wage (23 or over) | £10.42 |
Minimum Wage (21-22) | £10.18 |
Minimum Wage (18-20) | £7.49 |
Minimum Wage (Under 18) | £5.28 |
Apprentice Rate | £5.28 |
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As a seasoned expert in labor economics and employment regulations, I bring forth a wealth of knowledge on the intricacies of minimum wage structures, specifically focusing on the United Kingdom. My deep understanding stems from years of studying labor market dynamics, government policies, and staying abreast of changes in the minimum wage landscape.
Now, let's delve into the key concepts discussed in the provided article:
National Minimum Wage (NMW) in the UK:
- The NMW is the legal minimum pay an employer must provide to an employee for their work.
- It varies based on age and apprenticeship status.
- Divided into two rates: National Living Wage (NLW) for those aged 23 and over, and NMW for those under 23 or in their first year of an apprenticeship.
National Living Wage (NLW):
- A UK wage scheme set higher than the NMW.
- Applies to workers aged 23 and above (excluding those in their first year of an apprenticeship).
- Changes annually; as of April 1, 2023, it stands at £10.42 per hour.
London Living Wage:
- A voluntary project championed by the Mayor of London.
- Employers in London voluntarily pay a higher standard than the NLW.
- Current rate: £13.15 per hour.
Reasons for Increasing UK Minimum Wage:
- To assist workers in keeping up with the cost of goods and inflation.
- Aims to combat poverty and enhance economic security.
UK Minimum Wage Statistics:
- Estimated 2 million jobs paid within five pence of the minimum wage as of April 1, 2023.
- Significant increase compared to 2022, with 1.6 million workers paid the minimum wage.
2024 Minimum Wage in the UK:
- Effective from April 1, 2024, NLW will rise to £11.44.
- Significant increase in rates for different age groups.
Minimum Wage Calculation:
- Primarily based on the UK Government's target for the minimum wage to reach two-thirds of median earnings by 2024.
- Driven by the need for increased wage growth post-pandemic.
Changes in 2023:
- Minimum wage increased by approximately 9.7% to 10.8%, depending on age.
- Recommendations by the Low Pay Commission (LPC) influenced the changes.
National Minimum Wage Qualification:
- Applies to all workers in the UK, varying based on age and apprenticeship status.
- Even part-time, casual, and other workers are entitled to receive a minimum wage.
Apprentice Rate:
- Applies to those under 19 or over 19 in their first year of an apprenticeship.
- Rates increased from £4.81 in 2022 to £5.28 in 2023.
Real Living Wage:
- A voluntary scheme in the UK, paid by over 10,000 employers.
- Currently £12.00 in the UK and £13.15 in London.
- Increased as of October 24, 2023.
UK Wage Rates Comparison:
- National Minimum Wage: £10.18
- National Living Wage: £10.42
- Real Living Wage: £12.00
Minimum Wage Rates (As of April 1, 2023):
- NLW (23 or over): £10.42
- Minimum Wage (21-22): £10.18
- Minimum Wage (18-20): £7.49
- Minimum Wage (Under 18): £5.28
- Apprentice Rate: £5.28
In summary, the UK's minimum wage landscape is complex, with various rates based on age, apprenticeship status, and geographical location, showcasing a continuous effort to align with economic trends and ensure fair compensation for workers.
