National Minimum Wage Increases

Oct 9, 2015


By Lyndsey Hall

The national minimum wage increased on October 1st, in line with recommendations from the Low Pay Commission.

The new rates are:

  • £6.70 for workers aged 21 and over
  • £5.30 for workers aged between 18 and 20
  • £3.87 for young workers (workers aged under 18 but above compulsory school age, who are not apprentices)
  • £3.30 for apprentices
  • The new accommodation offset is £5.35 per day

From April 2016, the new national living wage for over 25s will also be introduced at £7.20, increasing to a target of 60% of median earnings by 2020, which could be more than £9 per hour by then.

According to figures from the 

The think tank found that one in five employees in small businesses will get a pay rise as a result of the new national living wage, with wage bills rising by 0.3%; and by 2020 almost 3 in 10 workers will get a pay rise, increasing the wage bills by 0.8%.

The Office for Budget Responsibility (OBR) estimated that the new minimum wage would cost 60,000 jobs, as many employers would not be able to afford the increase, particularly in the retail and hospitality sectors.  According to a survey of 1,200 business owners by the Federation of Small Businesses, small firms are expecting to have to raise prices and slow recruiting to pay for the increase in salaries, and some are even planning to cut staff hours or reduce their number of staff.

With the introduction of Auto Enrolment and the increased payroll costs involved, the new minimum wage could push many small businesses to the brink; forcing them to downsize, or even cease trading.

According to Business Secretary Sajid Javid, “the increase for apprentices is the largest in history, making sure that apprenticeships remain an attractive option for young people.”

But could the wage increase mean less businesses are willing to take on apprentices?

What are your thoughts on the new minimum and living wages? How will the increase affect your business? Let us know in the comments or on Facebook and Twitter.

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