‘Biggest Cash Increase Ever’ as Government Set to Raise Minimum Wage in April

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The United Kingdom is set to raise the national living wage by April in what the government describes as “the biggest cash increase ever”. However, business owners worry the raise will negatively impact employment.

The living wage in the United Kingdom is set to rise by 6.2 per cent in April for people 25 and older, representing an increase of more than 4 times the rate of inflation. The increase will bring the minimum hourly rate to £8.72.

Boris Johnson said that the initiative will “level up” opportunities for people across the country, saying that for too long “people haven’t seen the pay rises they deserve”.

“Our government will put a stop to that, giving nearly three million people from Edinburgh to Eastbourne a well-earned pay rise, including the biggest ever cash boost to the National Living Wage,” he said according to The Telegraph.

The BBC reports that the new pay rates will be:

The National Living Wage for ages 25 and above — up 6.2 per cent to £8.72
The National Minimum Wage for 21 to 24-year-olds — up 6.5 per cent to £8.20
For 18 to 20-year-olds — up 4.9 per cent to £6.45
For under-18s — up 4.6 per cent to £4.55
For apprentices — up 6.4 per cent to £4.15

Andrea Leadsom, the Business and Energy Secretary, said: “Our people’s pay rise will put more money into the pockets of millions of hard-working Brits across the country – but we won’t stop there. We want to make the UK the first country in the world to eliminate low pay in the next five years.”

The Federation of Small Businesses (FSB) said that “an increase of this magnitude” would result in many companies hiring fewer people and cutting investments.

“There’s always a danger of being self-defeating in this space,” said director of external affairs and advocacy at the FSB, Craig Beaumont.

“Wage increases aren’t much good to workers if prices rise, jobs are lost and there’s no impact on productivity because employers are forced to cut back on investing in tech, training and equipment,” he added.

In 2016, the University of Washington found that increases in the minimum wage in the progressive American city of Seatle had cost low skilled workers an average of $1,500 per year, through hour cuts and job losses.

The study found that when the minimum wage was raised to $13 per hour, the result was 3.5 million fewer hours worked and that the number of low skilled jobs fell by 6.8 per cent, representing a loss of more than 5,000 jobs.

Follow Kurt on Twitter at @KurtZindulka

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