What is the National Living Wage? And who gets it?
The National Living Wage is introduced on 1st April. But what is it, and who gets it?
The new National Living Wage comes into law on Friday. The aim is for everyone to earn at least £9 an hour by 2020, but you may not see a huge uplift in your wages initially.
Here’s everything you need to know.
What is the National Living Wage?
This new wage is meant to lift everyone’s earnings so that they can afford to live.
“The idea is that it will provide a wage which is high enough for workers to have a normal standard of living,” says Jane Crosby, an employment law expert at Hart Brown. “It’s expected to boost the wages of six million people.”
From Friday 1st April most people will have to earn a minimum of £7.20 an hour. That’s 50p more than the current minimum wage. If you work 35 hours a week, that will give you an annual income of £13,104, which works out as £910 more than if you currently earn the highest minimum wage.
Don't assume you're entitled to it
In order to qualify for the living wage, you must be aged over 25 and not be in the first year of an apprenticeship, self-employed or volunteering.
If you are under 25 you will continue to receive the National Minimum Wage. The table below details how the National Living Wage compares to the National Minimum Wage for the different age groups.
|
Age |
Wage from 1st April |
|
Over 25 |
£7.20 |
|
21-25 |
£6.70 (rising to £6.95 in October) |
|
18-20 |
£5.30 (rising to £5.55 in October) |
|
Under 18s |
£3.87 (rising to £4 in October) |
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What is the point of the National Living Wage?
Over the years the National Minimum Wage has been criticised for not being generous enough. In many parts of the country it is impossible to feed and house yourself, and your family, when you earn just £6.70 an hour, at best.
For example, in London research by the Living Wage Foundation found that you need to earn at least £9.40 an hour to be able to meet your basic living requirements.
In order to make up the shortfall, many working people receive tax credits. The idea is that the new National Living Wage wage will take the burden of paying people proper wages off of the taxpayer, putting it entirely onto the employer.
The flip side of this is that we may see inflation rise as a result of the introduction of the National Living Wage. This is because many companies have said they will have to increase prices in order to cover their new enlarged wage bill.
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