National Living Wage

In the final moments of his budget speech, George Osborne introduced a new wage floor of £7.20 an hour for workers over the age of 25. Called the “National Living Wage” (NLW) it is essentially a new level of the National Minimum Wage (NMW) with the added advantage for the Government that it takes some of the sting out of the independent ‘living wage’ movement (Living Wage Foundation) which was beginning to gain some traction. The NMW rates will remain the same and continue to operate for 18 to 24 years olds.

The NLW will come into effect in April 2016 and is scheduled to rise to £9.00 an hour by the year 2020. The Office for Budget Responsibility reckons that 6 million earners will see their pay boosted as a result of the policy. That includes current minimum wage earners, and those who earn more than the minimum wage but less than the new rate.

The Living Wage Foundation have for a long time been in dispute with large companies over low pay but recently have received a boost after IKEA became the first large national retailer to implement the living wage for its UK staff. IKEA will introduce a pay rise for more than 4,500 staff from next April (with London staff receiving a minimum of £9.15 an hour and the rest of the UK receiving £7.85).

The Living Wage Foundation will continue to challenge the likes of Tesco, Sainsbury’s and Next, to pay the voluntary rate, which is calculated according to the cost of living. Furthermore, the new living wage will still be below the level of London’s current living wage, even when it reaches £9 an hour by 2020. No doubt campaigners will continue to raise this as an issue arguing that rates of pay still don’t cover the costs of living.