UK National Living Wage: 2 million Britons to get pay rise

The minimum hourly wage for people over 23 will rise by 6.6 per cent to £9.50 ($13), the government announced ahead of its budget announcement on Wednesday.

The increase in the national living wage is more than double the current inflation rate of 3.1%. But it has been criticized as insufficient because inflation is expected to increase over the next few months and the government is cutting benefits for some low earners while hiking fees on the workers.

Low-income households also spend a higher proportion of their income on energy bills, and they could come under additional pressure as energy prices rise.

Britain’s gas and electricity regulator announced in August that the price cap protecting up to 15 million households from bill hikes would rise by up to 13% this month after gas prices natural have set new records. Another cap increase is expected in April.

Higher wages in the face of rising inflation

Nye Cominetti, senior economist at the Resolution Foundation’s economic policy think tank, said raising the minimum wage “would be very welcome”, not least because “low wages have been hit the hardest” by the pandemic. of coronavirus.

The government recently raised the minimum wage more than inflation, Cominetti said. But he warned that April’s rise “would actually be a smaller real rise than some recent years, given that inflation is expected to exceed 4% by April 2022”.

Some economists expect prices to rise even more. Huw Pill, the Bank of England’s top economist, told the Financial Times last week that he “wouldn’t be shocked” see inflation exceed 5% early next year.

Higher wages also won’t fully offset government cuts to a low-wage-claimed benefit called Universal Credit. The benefit was increased during the pandemic, but is now reduced by £20 ($27.50) per week.

Some 4.4 million families benefit from universal credit, while only 2 million workers receive the national living wage.

Tom Waters, senior research economist at the Institute for Fiscal Studies research body, said full-time minimum wage workers would see their earnings rise by more than £1,000 ($1,378) a year. But those on Universal Credit would only have their disposable income increase by a quarter – £250 ($344.50) – ‘because their taxes go up and the benefits they receive go down as their income goes up’ , did he declare.

By the time spring rolls around, the hike may seem a lot less.

“Rising inflation will (…) blunt the value in real terms of this minimum wage hike – and of course, while prices are currently rising, the minimum wage hike will not take effect until April,” Waters said.

Michael A. Bynum