October 29th 2024.
Labour Party leaders Keir Starmer and Rachel Reeves have announced that the upcoming Budget will prioritize workers, businesses, and economic growth. One of the major changes announced is a pay increase for millions of workers who are currently earning the minimum wage or the living wage. This news comes as a welcome relief for those struggling to make ends meet.
Starting from April of next year, the National Living Wage will see a significant increase of 6.7%, resulting in an additional £1,400 per year for eligible full-time workers. At the same time, the National Minimum Wage, which is currently paid to workers between the ages of 18 and 20, will also see its largest increase to date. This aligns with Labour's goal of eventually eliminating age brackets altogether.
Chancellor Rachel Reeves has hailed this move as a significant step towards delivering on the government's promise of a genuine living wage for working people. However, there are concerns from some businesses that this increase in wages could put further strain on their already tight budgets.
Peter Connolly, owner of Nortons Digbeth in Birmingham, acknowledged that this measure would not have a significant impact on his business as they already pay their employees according to the Living Wage Foundation's recommended amount. However, he pointed out that for businesses that currently pay the government's minimum wage, this increase could be a significant jump. He shared how they felt the impact last year when the Living Wage Foundation's recommended amount went up by almost 10%.
It's worth noting that many night-time venues have already committed to paying their workers a living wage. Lyle Bignon of the Night Time Industries Association sees this increase as an incentive for businesses to attract and retain employees. However, he also acknowledges that this could put added pressure on business owners who are already struggling to make ends meet.
Kate Nicholls, Chief Executive of UKHospitality, stressed the importance of the upcoming Budget in light of these wage increases. She pointed out that this added £1.9 billion to the hospitality wage bill, along with other potential changes such as employer NICs and business rate rises, could have a significant impact on businesses in the sector. She expressed concern that without additional support from the government, this Budget could turn into a nightmare for small business owners.
One question that might be on people's minds is: what is the difference between the national living wage and the minimum wage? The National Living Wage is the minimum wage guaranteed to workers aged 21 and over, while the National Minimum Wage is for those aged 18, 19, and 20. Labour's aim is to eventually align these two into a single adult wage. Mr Connolly believes that this increase was inevitable and could ultimately have a positive impact on businesses like his own. He shared how the relatively high pay at his establishment has resulted in low employee turnover and has forced other businesses in the area to raise wages to compete for good staff.
Aside from the increases in the living and minimum wages, the minimum hourly wage for apprentices will also see an increase next year. These changes were recommended by the Low Pay Commission and will be presented in tomorrow's Budget by the Chancellor to the House of Commons.
Baroness Philippa Stroud, chair of the Commission, acknowledged the challenges that businesses have faced with the significant increase in the adult rate over the past two years. She also emphasized the Commission's role in balancing various factors to ensure a fair wage for the lowest-paid workers while also considering economic factors. In the end, these changes will result in a real-terms pay increase for those who need it most.
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