Millions Of Workers Set To Benefit From The Seventh Highest Annual Increase In The Minimum Wage's History

30th October 2024

Commenting on reports that the Chancellor is set to announce that the headline rate of the National Living Wage will rise by 6.6 per cent to £12.20 an hour next April.

Nye Cominetti, Principal Economist at the Resolution Foundation, said, "Millions of low earners are set for good news in the Budget when the Chancellor announces the latest inflation-busting rise in the National Living Wage, which is expected to rise by 6.6 per cent to around £12.20 an hour.

"But while large in cash terms, this latest increase is smaller than each of the last two years, when the minimum wage rose by almost 10 per cent.

“The smaller rise in the minimum wage next Spring - expected to be the first time in almost a decade when it has risen no faster than typical wage growth – is sensible in the context of an expected rise in employer National Insurance contributions at the same time. The Government may want to take a more ambitious approach in future years.

“With the Government also set to announce bigger minimum wage rises for those aged 18-20, the Low Pay Commission must continue to monitor the employment effects of a higher minimum wage, including whether firms are switching to self-employed labour to minimise their tax bills and employment rights obligations."

A £12.20 National Living Rate from 1 April 2025 would be an increase of 6.6 per cent, and the seventh highest annual increase in the minimum wage's history – in both cash and real-terms (based on the Bank of England’s inflation forecasts).

The Foundation notes that the National Living Wage rose by 9.8 per cent in cash terms last year, and by 9.7 per cent the year before that.

Since 2016, the National Living Wage has consistently risen faster than the typical hourly pay growth to increase its ‘bite’ relative to typical earnings, from 54.5 per cent in 2015 to 66.6 per cent in 2024.