The national living wage paid to workers aged 25 or over will rise from £7.50/hour to £7.83/hour next April, Chancellor Philip Hammond announced today.

The 33p increase represents a 4.4% rise, meaning the UK's lowest paid workers will see their pay rise above current levels of inflation. It amounts to an annual increase of about £600 for a full-time worker.

The Government has previously said it plans to raise the national living wage to £9/hour by 2020.

What is the national living wage?

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

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

Compulsory Minimum and Living Wages
  National living wage National minimum wage*
  Age 25+ Age 21-24 Age 18-20 Age under 18 Apprentice
Current level £7.50 £7.05 £5.60 £4.05 £3.50
From April 2018 £7.83 £7.38 £5.90 £4.20 £3.70
* Applies from school-leaving age, which varies around the UK.

A £7.83 an hour national living wage still falls short of what campaign group Living Wage Foundation has called for. It believes employees currently need to earn at least £8.75/hour (£10.20/hour in London) to live and support their families.

When the national living wage was first announced, MoneySavingExpert.com founder Martin Lewis said: "This is not a living wage. [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."

Martin Lewis
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