Minimum wage rises for two million lowest-paid workers – but thousands miss out

Unions say ‘those expecting decent pay increase have been let down’

Around two million workers will receive a pay rise from Thursday when the promised rise in the minimum wage comes into effect – but hundreds of thousands of the lowest-paid who are currently on furlough will miss out.

The National Living Wage increases by 19p an hour, or 2.2 per cent, to £8.91, the equivalent of more than £345 a year for a full-time employee, and will be given to 23 and 24-year-olds for the first time.

Ministers said the increase means a full-time worker on the National Living Wage will be taking home £5,400 more annually than they were in 2010, and it will particularly benefit workers in sectors such as retail, hospitality and cleaning and maintenance.

However TUC general secretary Frances O'Grady said “those expecting a decent pay increase today have been let down by the government's decision to row back on the full rise they were promised”.

She called for the minimum wage to rise to £10 an hour “to stop millions of working people from living in poverty”.

Furloughed workers will continue to receive 80 per cent of their income before the rise came into force, and will not see the increase apply to their pay until they return to work.

There are currently estimated to be 4.7 million workers on furlough – around 800,000 of whom are among the lowest paid.

The full changes are:

• For those aged 23 or over, the minimum wage has increased 2.2 per cent, from £8.72 to £8.91
• For those aged 21 and 22, the minimum wage has increased 2 per cent, from £8.20 to £8.36
• For those aged 18 - 20, the minimum wage has increased 1.7 per cent, from £6.45 to £6.56
• For those aged under 18, the minimum wage has increased 1.5 per cent, from £4.55 to £4.62
• The apprentice rate has increased 3.6 per cent, from £4.15 to £4.30

Boris Johnson, the prime minister, said the increase was a “well-earned pay rise” while Kwasi Kwarteng, the business secretary, said workers should check their pay packet “to ensure they're getting what they are entitled to, and remind employers of their duty to pay the correct wage”.

Mike Hawking of the Joseph Rowntree Foundation said: “The pandemic has shown the urgency of taking steps to tackle the injustice of in-work poverty and move towards a Real Living Wage.

”Today's boost is necessary but as we start to recover from the impact of the last year, too many workers are finding that minimum wage increases are being wiped out due to inadequate social security, insufficient hours available to them, and high housing costs.“

Laura Gardiner, director of the Living Wage Foundation, which sets the voluntary Real Living Wage rates – currently £10.85 an hour in London and £9.50 outside the capital – said: ”The introduction of the National Living Wage has delivered a solid pay rise to minimum wage workers, and it's welcome to see the government continuing to commit to ambitious increases.

“However, there is still a substantial gap between this wage rate and one based on the cost of living, with National Living Wage workers falling billions of pounds short of a real Living Wage over the past five years.

”The number of employers signing up to the Real Living Wage has continued to grow, even during the pandemic, as businesses recognise the benefits of a healthy and motivated workforce.“

Bryan Sanderson, chairman of the Low Pay Commission, which recommends the statutory rates, said: ”This week's increase is our first step towards the government's target of two-thirds of median earnings.

“It is a real-terms increase, meaning that an hour's work can buy more than it could last year at the start of the pandemic. The level of the new rate however also reflects the need to protect workers from job losses.”

The commission said its best estimate for the National Living Wage rate in 2022 is £9.42, but this is subject to more uncertainty than usual and is likely to change.

Additional reporting by PA