From today the UK will increase the minimum wage from £6.70 an hour to £7.20, giving those on low pay an extra £1,000 a year in their pocket.
Conor D’Arcy, a policy analyst at the Resolution Foundation, said: “The National Living Wage will give a welcome wage boost to six million workers. Pay raises don’t come for free, and the expected rise will take the wage floor into uncharted territory. But with the economy getting stronger the vast majority of employers should be able to afford the new higher wage floor, which will allow their lowest-paid staff to share in the recovery.”
The announcement by George Osborne surprised many including the Low Pay Commission who tells the government what the National Minimum Wage should be. Interestingly, since the announcement in his summer 2015 budget, the Commission has advised how to raise the rate from £7.20 to £9.00 by 2020.
The rise in pay is the largest annual increase in minimum rate in any G7 country in 2009 and hopes to improve the lives of over one million workers aged 25 and over.
A recent government survey found that 59% of those asked will feel more motivated due to the rise in pay.
Surprisingly, not everyone waited until the policy came into place today and raised the rate to £7.20 well before now by extending the wage to workers under 25 years of age.
It’s far too early to see the effects of this rise but for many, it will be a welcomed addition to their monthly pay packet.