More than a million workers waking up to pay rise boost tomorrow

More than a million of people will wake up a to a pay rise boost tomorrow. More than a million low-paid workers will get a pay rise of more than 6 per cent next year as the minimum wage is increased at the budget from the Labour Party government.

Younger workers will get an even bigger increase as ministers say that 18 to 20-year-olds should eventually be paid the same older workers. About 1.6 million people receive the “national living wage” of £11.44 an hour, the minimum wage for over-21s.

It will rise to more than £12.12 after ministers promised to “raise the floor” on wages. Workers aged 18 to 20 can legally be paid a lower rate of £8.60 an hour but ministers want a “single adult rate” and Chancellor Rachel Reeves is expected to announce a bigger increase for younger staff to get closer to the over-21 rate.

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Nye Cominetti, the principal economist at the Resolution Foundation, said: “Millions of low earners are set for good news in the budget when the chancellor announces the latest rise in the minimum wage”. Cominetti added: “A bigger surprise is the expected increase in employer national insurance contributions. As a result of the two together, some businesses will legitimately say that their wage costs have gone up quite a bit as a result of this budget.”

Tina McKenzie of the Federation of Small Businesses said: “It is businesses that pay people’s wages, plus all the tax government charges on top, which must be factored in when deciding on the Living Wage rate.” Paul Nowak, general secretary of the TUC, added: “At a time when the cost of living is still very high the lowest paid would really benefit from a decent increase in the minimum wage. We know that low-paid workers spend more of their cash in their local economies. So any increase in their spending power will benefit local firms too.”

He added: “Every time the minimum wage goes up there are some voices who predict this will drive up unemployment. Every time they are wrong.”