Is minimum wage going up in 2022 and who will benefit from the rise?

With the Real Living Wage set to rise, we look a if minimum wage will be going up too

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The Living Wage Foundation has upped the Real Living Wage in the wake of the cost of living crisis, and many want to know is minimum wage going up too?

In a time of rising gas prices (opens in new tab), energy bills going up (opens in new tab) and measures being taken to save money on fuel costs (opens in new tab) - every penny really counts. Thankfully a recent change to the minimum wage in 2022 will hopefully go some way to alleviate the current pressures of the cost of living increase.

And now the Living Wage Foundation (opens in new tab) has upped the Real Living Wage - a rate that is set to reflect the cost of everyday needs and is voluntarily paid by many employers across the UK. The rise sees the wage increase by £1 to £10.90 across the UK and by 90p to £11.95 in London, and has left many asking if this means the minimum wage will be increasing as well.

Is minimum wage going up?

At the moment, there are no plans for minimum wage to go up in 2022, after the rate was raised earlier in they year. 

However, in August the Trades Union Congress (opens in new tab)(TUC) said that the minimum wage should be raised to £15 due to the cost of living crisis, with general secretary Frances O'Grady saying "Every worker should be able to afford a decent standard of living. But millions of low-paid workers live wage packet to wage packet, struggling to get by - and they are now being pushed to the brink by eye-watering bills and soaring prices."

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The government has said that raising the minimum wage could push employment up, and although Chancellor Kwasi Kwarteng will be delivering a mini budget (opens in new tab) to the House of Commons, it is not expected to include an increase to minimum wage.

Despite this, in September 2022 the Living Wage Foundation upped the Real Living Wage for workers across the UK, to reflect the increased cost of living. The 10.1% rise was brought forward from November, and is the biggest in the scheme's 10-year history.

The Living Wage Foundation is a charity, and sets the Real Living Wage higher than the minimum wage to reflect what they think people need to earn to cover everyday needs. More than 10,000 employers throughout the UK have signed up to the policy, and it's expected that around 400,000 workers will benefit from the boost.

Katherine Chapman (opens in new tab), director of the Living Wage Foundation, said millions were still facing a "heat or eat" choice this winter, adding: "Today's new rates will provide hundreds of thousands of workers and their families with greater security and stability during these incredibly difficult times."

When did minimum wage go up in 2022?

Minimum Wage went up on April 1, 2022 for those aged 23 years and older. Ex-Chancellor Rishi Sunak first announced the increase on October 27, 2021 as part of his Autumn Budget. The new wage marks the third highest annual increase since the financial crash of 2008.

Ministers view the increase in minimum wage as the way to tackle, what former PM Boris Johnson called, the “low-wage, low-cost approach” to the economy. 

"That's the direction in which the country is going now. Towards a high-wage, high-skilled, high-productivity and, yes, thereby a low-tax economy," he said. "That is what the people of this country need and deserve. Yes, it will take time, and sometimes it will be difficult. But that is the change that people voted for in 2016."

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However, Labour's shadow chief secretary to the Treasury, Bridget Phillipson, said that the rise in minimum wage was an "underwhelming offer". She described how it would mostly be used up by the additional rises in taxes that the Chancellor announced during the review, universal credit cuts and higher energy bills.

The cut to the £20 per week universal credit uplift, brought in during the pandemic last year, happened on the same day that the increase was announced. It was the biggest overnight social security cut ever. As a result, 5.5 million people in the UK are experiencing a £1,040 payment gap per year. 

It also came at the same time as the end of furlough, which the government began to help those who could not work during lockdown.

Despite this, there was good news on the horizon as Universal Credit went up (opens in new tab) in 2022, a benefit that is provided by the government for low income households to apply for (opens in new tab).

How much is the new minimum wage in 2022?

The minimum wage is currently £9.50 an hour for those over 23-years-old. This is an increase of 59p or 6.6 per cent, with the previous wage £8.91 an hour. Rishi Sunak said the rise "ensures we're making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament."

The increase to minimum wage meant that the two million people on this hourly pay received an increase of £1,000 for a 35-hour week. It also put the national minimum wage on target to hit £10 per hour by the next general election in two years' time.

But while it's being referred to as the "minimum wage", the National Living Wage is what's actually being discussed here. The official National Minimum Wage is only applicable to those under 23-years-old but above school leaving age. Following changes in April this year, anyone over 23-years-old is now on the National Living Wage. This difference came into place in 2016 initially, but only those 25-years-old or over were eligible for the new band.

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The National Minimum Wage has also gone up, however:

  • 21 to 22-years-olds now receive £9.18 an hour (was £8.36)
  • 18 to 20-year-olds now receive £6.83 an hour (was £6.56)
  • Under-18s now receive £4.81 an hour (was £4.62)
  • The Apprentice Rate has changed from £4.30 to £4.81 per hour

The apprentice minimum wage is for people under 19-years-old. Or, for people over 19-years-old but in their first year of the apprenticeship. If an apprentice is over 19-years-old and they have finished the first year of the programme, they receive minimum wage for their age group.

Every year the Low Pay Commission (LPC) (opens in new tab), an independent expert advisory board, makes recommendations to the government. In their April 2021 report, the LPC predicted the recommendation of £9.42 per hour - up to a maximum of £9.45. On October 25, they put their recommendations to Mr Sunak. Sources later revealed to The Sun that the increase would work out to £9.50 per hour for those on the National Living Wage.

Who benefitted from the rise in minimum wage?

According to The Times, lowest earners on the National Living Wage (over the age of 23) will benefit from the recent rise in minimum wage. The increase from £8.91 to £9.50 took place in April 2022, marking the start of a new tax year - when rates usually change. 

The change affected those in lower brackets, too, who receive the National Minimum Wage. The rate of pay for those ages 21 to 22 increased from £8.36 per hour to £9.18 per hour in April 2022, while those aged 10 to 20 saw a 27p increase from £6.56 to £6.83. 

The under 18 received a 19p increase and the apprentice wage went up by 51p.

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