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National minimum wage increases

From Thursday 1 October, over 1 million workers will see their pay rise when the national minimum wage (NMW) goes up.

The adult hourly rate increases by 20p to £6.70 and the rate for 18-20 year olds will now be £5.30. Apprentices can now expect to receive £3.30 an hour, an increase of 57p. The proportion of workers earning the legal minimum is set to more than double over the next 5 years, according to new analysis published by the Resolution Foundation.

12% of employees are expected to earn within 1% of the NMW, or the incoming national living wage (NLW) if they are over 25, by 2020. The foundation expects 3.2 million to earn the legal minimum by the end of the current parliament.

Theresearch found that employees in the North East, East Midlands and Wales are most likely to earn the legal minimum:

  • 15% ofworkers in these regions by 2020
  • 7% will earn within 1%of the NMW or NLW in London 
  • 15%female workers will be earning 1% the NMW or NLW by 2020, along with 20% of those aged over 66.

The number of workers earning the legal minimum is likely to be higher in the private sector, with the foundation predicting that 15% will do so. This figure rises to 25% for those working for micro-businesses and to 40% for those in the hospitality sector.

Business Secretary Sajid Javid, said:

“The increase for apprentices is the largest in history making sure that apprenticeships remain an attractive option for young people. While the National Minimum Wage will see the largest real-terms increase since 2007.”

Adam Corlett, economic analyst at the Resolution Foundation, said:

“The new ambition shown by the Chancellor is welcome. But it will mean that around one in seven private sector workers will have their pay directly set by government by 2020.

“Given the scale of the change, government must now work closely with the Low Pay Commission and employers to ensure the policy is a success. It’s also important that businesses offer low-paid staff more opportunities for promotion and progression so that they don’t get stuck on the wage floor.”

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