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Is Increasing the National Living Wage Enough?

A pink piggy bank
Does the National Minimum Wage meet the current costs of living?

The National Living Wage (NLW) and National Minimum Wage (NMW) are the amounts that the government state workers must be paid as a minimum depending on different age brackets and apprentices. Each year in April, these rates are reviewed and increased which means workers on those  minimum wages should see their pay increase.

The difference between NLW and NMW is to do with ages; the NLW must be paid to workers over the age of 25 as it is the highest rate of the NMW. The NMW can be as low as £3.90 for Apprentices and increases for under 18’s, over 18’s and ages 21-24.

Confusingly, there is another wage called the Living Wage (LW), which is not set by the government, but by the Living Wage Foundation who independently calculate the costs people need to get by and encourage employers to pay according to their calculations instead of what the government set.

Since its inception in 2001 by Citizens UK, the campaign for the LW has been consistently higher than the NMW and NLW and has included the London Living Wage; a separate wage tier for people living in a more expensive part of the country.

2019/2020 sees the highest rate of the NMW and NLW as £8.21 but the LW Foundation have calculated that the actual wage should be £9.30 (£10.75 in London) as that is more relevant and takes into account how much groceries and other goods/services cost.

In April 2020 the NLW will rise from £8.21 per hour to £8.72, an increase of 51p. As this is a government enforced raise, employers must adhere to it and payroll administrators all around the UK will be busy making those changes which makes it a busy and stressful time of year.

It is at this time of year when employees who are already earning above the minimum wage, might start to worry that their employers won’t look at increasing wages across the whole company. It is important for employers to recognise that adhering to the government minimum would raise some wages but not others, there will be many other employees who need their wages to rise with the inflation of the NLW too.

Account Manager’s Dan and Sophie at Impact Recruitment encourage employers in Northamptonshire to think about the whole picture.

“Don’t wait to see whether other companies increase their wages across their workforce, make the first move. Employers who review and increase salaries yearly tend to attract and retain the best employees.” says Dan.

Sophie continues, “the cost of living is increasing and that isn’t just for people who earn minimum wage, all your other employees have to face that increase too. Is it fair to see one worker go from £8.21 per hour to £8.72 but keep another worker at £9.00 and not move them to £9.51?”

With evidence that “the rate of pay growth has slowed even as economies have recovered” and an increase in the offer of perks and benefits, it seems that employers are forgetting just how significant a simple pay rise could be.

In addition, the LW Foundation found that 93% of university students want to work for LW employers, 90% of consumers agree that pay should reflect living costs and that businesses who pay LW report positive results.

The NLW and NMW increase this April is part of the key issues surrounding workers today; are they being paid enough to live on? And is their pay raising accordingly, across the board? At the moment it looks like the power is with the companies and employers to instigate change whilst the government catches up.