30 October 2024

National Living Wage to increase to £12.21 in April 2025

The Government has announced its acceptance of the Low Pay Commission's (LPC) recommendations on the rates of the National Minimum Wage (NMW), including the National Living Wage (NLW).

The rates which will apply from 1 April 2025 are as follows:

The LPC's recommendations meet the remit set by the Government. The recommended NLW rate is expected to equal two-thirds of median earnings and to have the highest real value in the history of the UK's minimum wage. The increase in the 18-20 Year Old Rate narrows the gap between that and the NLW, in anticipation of the adult rate being extended to 18 year olds in future years.

Chancellor of the Exchequer Rachel Reeves said:

"This Government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise."

Baroness Philippa Stroud, Chair of the Low Pay Commission, said:

"The Government have been clear about their ambitions for the National Minimum Wage and its importance in supporting workers' living standards. At the same time, employers have had to deal with the adult rate rising over 20 per cent in two years, and the challenges that has created alongside other pressures to their cost base.

"It is our job to balance these considerations, ensuring the NLW provides a fair wage for the lowest-paid workers while taking account of economic factors. These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time."

The Government will promote this as a pay boost for millions of workers, but there will be conerns from businesses about the extra costs of these increases, the added pressure and costs on businesses to maintain pay differentials throughout their entire employee pay structure - and the effect all of this has on their business; on top of an expected Budget announcement that employer National Insurance Contributions (NICs) will increase, perhaps by 2%. 

There will be added concern that the inflationary effects of these measures may discourage the Bank of England's Monetary Policy Committee from cutting interest rates, as they otherwise might have been expected to do.

Follow the links below for further information in the National Minimum Wage announcenments for 2025.