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National living wage to rise to £8.72 in April

National living wage to rise to £8.72 in April

The national living wage paid to workers aged 25 and over will rise from £8.21/hour to £8.72/hour from April, the Government has announced.

The 51p increase represents a rise of 6.2% – over four times the rate of inflation, which stood at 1.5% in November. It will mean a pay rise of £930 per year for a full-time worker earning the national living wage.

Workers aged under 25 will also see a rise in their minimum wage, of between 4.9% and 6.4% depending on age.

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What is the national living wage?

Introduced in July 2015 by the then Chancellor George Osborne, the compulsory national living wage is the lowest wage which can legally be paid to employees aged 25 or over. It is adjusted every April.

It's higher than the compulsory national minimum wage, which applies at varying rates to employees aged under 25 (as the table below illustrates) and is also rising.

Compulsory living and minimum wages

  National living wage (hourly) National minimum wage (hourly) (1)
  Age 25+ Age 21-24 Age 18-20 Age under 18 Apprentice
Current level £8.21 £7.70 £6.15 £4.35 £3.90
From April 2020 £8.72 £8.20 £6.45 £4.55 £4.15

(1) Applies from school leaving age, which varies around the UK

The 'national living wage' is different from the 'real living wage', which is the amount calculated by campaign group the Living Wage Foundation as the minimum pay workers and their families need to live.

The 'real living wage' is currently £9.30 across the UK and £10.75 in London, for anyone aged over 18.

When the national living wage was first announced, MoneySavingExpert.com founder Martin Lewis said: "This is not a living wage. The [then] Chancellor [George Osborne] has naughtily nicked the name from the Living Wage Foundation... By using the valued brand of 'the living wage', even though he's not paying that amount, he hopes to get extra credibility."

In September, Chancellor Sajid Javid pledged to increase the 'national living wage' to be two thirds of 'median earnings' by 2024 (that's an average, which is the middle amount of what workers earn – ie, half of workers earn less than it and half more).

He also plans to expand the national living wage to cover workers aged 23 and over from 2021, and aged 21 and over within five years.