What is the minimum wage and how much is it?

Image source, Getty Images

The national living wage will increase from next April, Chancellor Jeremy Hunt is to confirm on Monday.

It means the minimum wage for workers aged 23 and over is expected to rise from £10.42 to at least £11 an hour.

That would boost the pay of about two million people.

How much is the minimum wage?

Since 1 April 2023, the rates are:

  • National Living Wage for over-23s: £10.42 an hour
  • National Minimum Wage for those aged 21-22: £10.18
  • National Minimum Wage for 18 to 20-year-olds: £7.49
  • National Minimum Wage for under-18s: £5.28
  • The Apprentice rate: £5.28

The apprentice rate applies to people aged under 19, or people over 19 in the first year of their apprenticeship.

The Conservatives say this would increase the annual earnings of a full-time worker on the national living wage by £1,000 next year.

The minimum wage is the same across all parts of the UK.

Do employers have to pay the minimum wage?

The retail, care and hospitality sectors account for a large number of minimum-wage jobs, although they are found in many other parts of the economy too.

The UK national minimum wage sets out the lowest amount that workers above school-leaving age can be paid per hour by law.

Any employer not paying the minimum wage can be fined by the UK tax authority, HMRC.

What happens if firms don’t pay the minimum wage correctly?

Companies involved include WH Smith, Marks & Spencer, Argos and Lloyds Pharmacy.

WH Smith was the worst offender, having failed to pay more than £1m to more than 17,600 workers.

Who sets the minimum wage?

The rates are decided each year by government and based on the advice of an independent advisory group, the Low Pay Commission.

Its recommendations reflect how many people are in work, what’s happening to earnings and how much people are having to pay for essentials such as food and housing.

Image source, EPA

Who isn’t entitled to the minimum wage?

People who don’t qualify include:

  • the self-employed
  • company directors
  • volunteers
  • members of the armed forces
  • people living and working in a religious community.

People with disabilities or those in long-term unemployment who take part in a government work programme are paid fixed amounts at different stages of the scheme, which are less than the minimum wage.

Work done by prisoners is paid at a minimum of £4 a week, while students on work placements of less than a year as a required part of their studies are not entitled to be paid anything.

When was the minimum wage introduced?

The law to introduce the minimum wage was passed in 1998 by the Labour government and it came into force the following year.

It started at £3.60 for those 22 and older, and £3.00 for 18-21 year olds.

Before the minimum wage was introduced, the lowest-paid people consistently saw the slowest growth in their wages.

Image source, Getty Images

Did the minimum wage cost jobs?

Before the minimum wage was introduced, there was concern that it would cost jobs, because employers would compensate for their higher wage bill by hiring fewer people.

But this didn’t turn out to be the case.

There’s no evidence of an overall loss of jobs linked to the minimum wage, and only weak evidence of negative impacts on some groups of workers.

What is the ‘Real Living Wage’ and how much is it?

More than 430,000 workers benefit from the voluntary “Real Living Wage”, which is set by the Living Wage Foundation charity.

It’s above the level of the legal minimum wage, reflecting what the charity thinks people need to earn to cover everyday needs.

It is currently £11.95 per hour in London, and £10.90 per hour elsewhere in the UK.

The number of Living Wage-accredited employers has more than doubled to 12,500 in the past two years, and includes Ikea, Aviva, Nationwide and Burberry.

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