The Chancellor Sajid Javid has announced a new Government pledge to increase the National Living Wage and extend it to 21-year-olds.
Currently, those earning the National Living Wage receive £8.21, but under the Chancellor’s plans announced at the Conservative Conference, this rate would increase to £10.50 an hour by 2024.
The National Living Wage is also only currently available to those aged 25 or older, but this age-limited will be reduced in phases over five years, with 23-year-olds earnings boosted from 2021.
Any future rises to the National Living Wage will be pegged to two-thirds of median earnings, higher than the current 60 per cent target.
The Government has claimed that the move will provide a £1,900-a-year boost before tax for four million people in 2024.
Chancellor Sajid Javid told the party conference: “Over the next five years, we will make the UK one of the first major economies in the world to end low pay altogether.
“To do that, I am setting a new target for the National Living Wage – raising it to match two-thirds of median earnings.
“That means, on current forecasts, this ambitious plan will bring the National Living Wage up to £10.50 – giving four million people a well-earned pay rise.
“And to help the next generation of go-getters get ahead, we will reward the hard work of millennials too by bringing down the age threshold for the National Living Wage – to cover all workers over the age of 21.
“The hard work of the British people really is paying off, and it’s clear it’s the Conservatives who are the real party of labour. We are the workers’ party.”
The ongoing increase in the National Living Wage, above the rate of inflation, is likely to have a considerable impact on employee costs, so employers must plan to meet these. If you would like assistance with your payroll, please contact us.