A 6.2% increase in the national living wage came into effect on Wednesday.
The increase was announced at the end of last year and was heralded by the government as “the biggest cash increase ever”.
The rise is more than three times the rate of inflation and takes hourly pay for people aged 25 and over to £8.72.
It has been welcomed by unions and comes as many workers across the country are on reduced pay because of the coronavirus lockdown.
The government’s coronavirus job retention scheme means employers can claim for 80% of wages in order to keep staff employed.
Union leaders said the increase was well deserved as many key workers such as carers and agricultural and shop workers are on minimum wage rates.
“Britain is indebted to its army of minimum wage heroes,” said TUC General Secretary Frances O’Grady.
“Many – including care workers and supermarket staff – are currently on the frontline of the battle against coronavirus. They deserve every penny of this increase, and more.”
The national living wage is the government-mandated minimum wage for people 25 and over. The minimum wage for under-25s will also rise.
From Wednesday, the new rates are:
- The National Living Wage for ages 25 and above – up 6.2% to £8.72
- The National Minimum Wage for 21 to 24-year-olds – up 6.5% to £8.20
- For 18 to 20-year-olds – up 4.9% to £6.45
- For under-18s – up 4.6% to £4.55
- For apprentices – up 6.4% to £4.15
Employers often worry that a higher minimum wage will lead to more unemployment as they will be forced to lay off workers in order to afford the increases.
But an independent report published last year said there has been little or no evidence of job losses as a result of rising minimum wage levels.
“Employment costs have surged in recent years and are cited as the number one cause of rising outgoings among small employers,” said Mike Cherry, national chairman for the Federation of Small Businesses.
But he said a policy to reduce the National Insurance contributions that firms are required to pay, which was announced in the Budget, will help small businesses foot the bill for the wage increase.
That policy is one of a raft of changes to come into force on Wednesday.
Is life getting more expensive?
Spring often brings major price hikes but the picture is more complicated this year – and some of the changes are dwarfed by the impact of the coronavirus on many household incomes.
Council tax will be typically be around 4% higher, prescriptions are up 20p to £9 – that’s England only – and the TV licence is £3 more expensive at £157.50.
The big mobile phone providers are pushing up their rates by more than 2% and BT broadband is more expensive too.
But water bills in England and Wales are being cut by 4% on average and the cap on the average standard rate energy bill is being brought down to £1,162 from Wednesday, a drop of £17.
The oil price has fallen sharply, which means energy bills may come down more. So could the cost of filling up the car.