Rise in National Living wage from April 2021

Rise in National Living wage from April 2021

Chancellor of the Exchequer Rishi Sunak announced last year in his spending review and just this 2021’s spring’s budget the rise of the national minimum wage and the national living wage. According to him, not only will we experience an increase in rates of both the National Minimum Wage and National Living Wage, but the threshold of the latter will have significant changes and will come into reality soon enough. 


What does this mean to the average citizens employed? Some will be eligible for a higher hourly rate compared before the announcement, which will be a good thing, especially this pandemic. Last year in November of 2020, the government has announced they have accepted the full recommendations originating from the Low Pay Commission just a month before, which is October of 2020.


The National Living Wage is expected to rise at 2.2%, which is remarkable to many. And more importantly, it is now extended to 23 and 24 years old individuals. Before, it only covered those 25 years and older. This April, both the National Living Wage and the National Minimum Wage will experience changes (for the better) that positively affect employed young people. The latter even covered those ageing 23 and below. 


What’s the reason for such a decision? According to sources, commissioners have proposed this increase of rates due to their beliefs and realisations. They claimed this needs to be done to recognise the risks the youth are taking in their venture to employment. Plus, there is the virus and risks the economic system currently has. 


Chair of Low Pay Commission Bryan Sanderson believes such actions taken are difficult but necessary. He had said the recommendation of a minimum salary rate in the middle of a pandemic and economic crisis is “formidable” and that looking forward to next year’s April has shown to be difficult, if not impossible, to some.


He says the argument between low-paid workers working crucial jobs during these trying times and obstacles with which small businesses face are both in need of a voice, not merely to overlap one another. In these times, their stability and competence are sorely needed by the public. 


The National Living Wage is set to increase by 2.2%, which is a jump from £8.72 per hour to £8.91. However, if we look at the increase of threshold as well, some low-paid workers will also see an increase up to almost 9%. In other words, those ageing from 23 to 24 years old will get the same rates as that of 21 to 22 years old, at £8.20.


Despite this, 23 to 24-year-olds will see a rise of rates of 771 pence per hourly work the following month. Managing director at HR consultancy Croner Paul Holcroft has stated that the impact shows that 23-25-year-olds having the same rates as that of 21 to 24-year-olds will see a rise in their salary up to 9%, and employers will need to facilitate this raise. 

About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.