Britain has announced plan to raise its minimum wage by 9.8% to £11.44 ($14.26) per hour starting April 2024.
This increase, announced by Finance Minister Jeremy Hunt, positions the UK’s minimum wage among the highest relative to average earnings in advanced economies.
Hunt, unveiling the news ahead of a mid-year budget update, emphasized the government’s commitment to reducing taxes, while placing greater emphasis on job-seeking for those unemployed, potentially impacting benefit eligibility.
Quest Times further reports that the finance minister, reiterating a pledge made at the Conservative Party’s annual conference, aims to elevate the minimum wage to at least £11 per hour, part of a broader initiative to reach two-thirds of average earnings.
On Tuesday, Hunt highlighted the positive impact of the National Living Wage, stating it has significantly decreased the number of low-paid individuals since 2010
“The National Living Wage has helped halve the number of people on low pay since 2010,” Hunt said.
He further disclosed that approximately 2.7 million workers are expected to directly benefit from these wage hikes.
The adjustment therefore includes a noteworthy change: workers aged 21 and 22 will now receive the full minimum wage for the first time, while lower rates for workers aged 18 to 20 and apprentices will see an increase.
However, the announcement comes against the backdrop of warnings from the Bank of England about the potential challenges in curbing inflation with the current pace of wage growth, reaching around 8% earlier this year.
In 2022, the OECD estimated that Britain’s minimum wage accounted for 58% of full-time earnings, ranking third in western Europe after Portugal and France.
The Low Pay Commission, an advisory panel on minimum wage matters, expressed cautious sentiments, noting that businesses, especially in social care and childcare, might face difficulties absorbing the increased costs without affecting demand.
“As last year, businesses felt pressured to pass National Living Wage increases onto consumers. More are worried this year that they are reaching a limit in what they can pass through without undermining demand,” it stated.