Will the minimum wage rise cancel out the increase in bills?published at 15:55 British Summer Time
By
Ben Chu
The
government has suggested the squeeze in living costs due to today’s bill rises
will be, to some extent, offset by its decision to increase the minimum wage.
The
Low Pay Commission estimates that in 2024, external there were around 1.9 million jobs
paid at or below the minimum wage, equivalent to around 6.5% of all jobs.
Those
in this group will benefit from the increase to both the National Living Wage
(for those 21 and over) from £11.44 to £12.21 per hour and the National Minimum
Wage (for those aged 18 to 20) from £8.60 to £10 per hour from today.
The government says, external for someone working full time on the National Living Wage, this
is equivalent to an annual increase of £1,400 a year in pay.
This
might be enough to cancel out an individual’s bill increases from today,
although it would depend on their particular circumstances, such as the size of
their energy bill, their local council and water provider, and whether or not
they drive a car.
Also,
this increase does not apply to the roughly 27 million UK jobs which are paid
above the minimum wage.
And
the Office for Budget Responsibility (OBR) has forecast, external that the government’s
decision to increase employer’s National Insurance contributions from 6
April, will put downward pressure on the pay of most workers, contributing to a
stalling of average inflation-adjusted earnings in 2026 and 2027.
The OBR says this is because it expects employers to “pass on” the costs of the rise to their employees in the form of lower pay than they would otherwise have received.
