Living wage increase benefits around 1.7 million workers
There's a 92p rise to ÂŁ10.42 an hour for workers aged 23 and over from tomorrow
Last updated 31st Mar 2023
Around 1.7 million workers will get a "significant" pay boost when the national minimum wage (NLW) increases from tomorrow (Saturday).
The Resolution Foundation says a 92p rise to ÂŁ10.42 an hour for workers aged 23 and over is equivalent to a near 10% increase.
The think tank says the increase is the biggest annual cash rise in the 24-year history of the minimum wage and one of the largest annual percentage rises.
The Foundation says the scale of the increase means the lowest-paid workers will enjoy a "rare" real-terms pay boost.
Around 1.7 million workers currently earning up to 5p above the current minimum wage will directly benefit in full from the increase in the NLW, though potentially another five million low-paid workers will benefit indirectly from its 'spillover' effects as employers look to maintain differentials between pay bands.
Since its introduction, in April 1999, when it was ÂŁ3.60 for workers aged 22 and over, the minimum wage has transformed hourly pay inequality across Britain, the foundation said.
But it said inequality has remained high and largely unchanged, saying action on low pay must be complemented by wider drives on employment, taxes, benefits and housing costs if living standards for low and middle-income families are to rise.
Senior economist at the Resolution Foundation, Nye Cominetti, said: "From tomorrow, millions of Britain's lowest earners are set for a significant pay boost as the national living wage rises by almost ÂŁ1 an hour.
"This latest rise isn't just delivering a much-needed pay rise tomorrow, it has transformed earnings across Britain over the past quarter of a century - reversing rising pay inequality and halving levels of low pay.
"But as well as celebrating the success of the national living wage it's also important to understand its limits.
"Ultimately, continued progress on tackling low pay should be complemented by action to boost people's hours and employment, as well as reforming our tax, benefit and housing systems. That's only way to really get living standards up and income inequality down."
Increase 'not going to lift pressure'
The TUC said the minimum wage is going up less than inflation and food prices.
General secretary, Paul Nowak, said: "Everyone who works for a living deserves to earn a decent living, but tomorrow's below-inflation increase to the minimum wage is not going to lift the pressure on hard-pressed families.
"A large chunk is going to be wiped out by soaring energy bills, and with food prices shooting through the roof, many low-paid workers will not see a positive difference in their spending power.
"It's time to put an end to low-pay Britain. That means getting the minimum wage to ÂŁ15 per an hour as soon as possible, and it means introducing industry-wide fair pay agreements so that all workers have a minimum set of pay and rights - starting with social care and the ferries sector."
The Living Wage Foundation said 12,000 employers already pay the voluntary "real" living wage of ÂŁ10.90 an hour and ÂŁ11.95 in London.
A worker earning the statutory rate would need an extra ÂŁ936 a year to bring their income in line with the voluntary figure, according to its research.
'Welcome boost'
Director of the Living Wage Foundation, Katherine Chapman, said: "This significant rise in the national living wage is a welcome boost to ease some of the pressure inflation continues to pile onto low-paid workers.
"It remains lower than the real living wage which is based on the cost of living. The good news is we have seen record numbers of employers signing up to pay the higher real living wage to protect their lowest paid staff during these tough times.
The End Fuel Poverty Coalition estimated that the benefits of the first 73 hours of work each month under the updated national living wage will be "wiped out" by the energy bills increase, which also comes in from April 1.
Co-ordinator of the Coalition, Simon Francis, said: "As employers give people on the NLW pennies, the Government is taking pounds out of their pocket due to the end of the energy bills support scheme."
The cost of living crisis is affecting many:
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to ÂŁ3,549 for an average home in October but a price freeze from the government restricted the typical bill to ÂŁ2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits ÂŁ100
On 9th June 2022, the average cost of filling up a car with petrol hit ÂŁ100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.