National Living Wage set to increase by 6.2%

Charities will need to spend more as nearly 3m workers are set to get pay increases

A pound coin.

Low paid workers will see more pounds in their pockets (Photo: PhotoGraham, CC BY-NC-SA 2.0 via Flickr)

By Annette McGill

The government has announced a 6.2% rise in the National Living Wage from April 2020, representing an increase of four times the rate of inflation. 

The National Living Wage is an obligatory minimum wage paid to workers in the UK aged 25 and above.  

From April, a full-time worker on the current minimum rate will see increase in gross annual earnings of around £930, according to the Treasury.

The voluntary sector has many employees on low pay, and charities will find it a challenge to meet the new pay rates. Many charity shop workers and carers are likely to benefit from the rise. 

The increased rates were recommended by the Low Pay Commission, an independent body that advises the government.

But  the increase does not meet the levels set by the Living Wage Foundation charity, which sets a voluntary pay floor which it says reflects what people need to live on. Living Wage Foundation “real living wage” is set at £9.30 an hour and £10.75 an hour in London.

Some 6,000 employers have committed to paying the real living wage to more than 210,000 workers, and in 2018 the Foundation launched an action plan to increase awareness about the real Living Wage in the charity sector.

By contrast some business leaders have responded to the government announcement with a warning that companies would find the wage rise challenging, and urged the government to reduce business costs elsewhere.

Increases for younger workers

The government also announced that young workers, who receive the National Minimum Wage, will also see their pay boosted, with increases of between 4.6% and 6.5%, dependant on their age.

The Chancellor has also announced plans to expand the reach of the National Living Wage to cover workers aged 23 and over from April 2021, and to those aged 21 and over within five years. This is expected to benefit around 4 million low paid workers.