Workers on National Living Wage receive huge pay bump

Campaigners say the Minimum Wage still doesn't pay enough despite a whopping 9.8% rise.

Millions of workers have just been given a £1,800-a-year pay rise – but the depressing reality is that many will still struggle to cover their basic costs.

The Government’s National Living Wage – the legal minimum for workers aged at least 21 – rose from £10.42 an hour to £11.44 at the start of April.

But the increase, which is worth around £1,800 to a full-time worker, is still not enough, according to Katherine Chapman, director of the Living Wage Foundation.

“It’s welcome news for the 3.7 million low-paid workers across the country, but still falls short of a wage which takes into account the real cost of living,” she said.

Realistic living costs

The foundation believes a £12 an hour minimum is needed by the average UK worker, while £13.15 is required for Londoners to cope with the capital’s higher costs.

This means UK workers are still £1,092 a year short of a real living wage, which is calculated based on a basket of goods to identify everyday costs.

The gap between the National Living Wage – and what’s needed – means workers in London would need to find an extra £3,334.50 to pay their various bills.

This difference could pay for almost a year’s worth of food or cover housing and energy costs for 23 weeks.

Tough few years

The cost of living has obviously risen sharply in the last two years, with inflation peaking at 11.1% in October 2022, a 41-year high.

In response, the Bank of England rapidly hiked the Base Rate from 0.1% to its current level of 5.25% in August 2023. 

Although the pace of inflation has slowed, the study revealed that UK food and non-alcoholic drink prices were still 5% higher in February than they were the previous year.

Impact of price hikes

Rising costs have hit everyone but those on lower incomes have been hit particularly hard, according to Sarah Coles, head of personal finance at Hargreaves Lansdown.

“The trouble is that they spend around a fifth of their income on the bare essentials, and they’ve shot up so much in price that millions of people are running on empty,” she said.

Coles pointed out that food costs were up by almost a quarter since the start of the cost of living crisis, which has made life a financial stretch for many people.

“The National Living Wage also only applies to those aged 21 and over,” she said.

“Workers under 18 and apprentices have a minimum wage of £6.40 an hour – a drop in the ocean of their costs.”