Prime Minister Boris Johnson this year said his goal was “a high wage, high skill, high productivity economy that the people of this country need and deserve”, and next year’s increases in the national living wage and national minimum wage are a key part of that.
However, the pay rises, which were announced as part of the Autumn Budget and Spending Review in October, simply don’t go far enough.
Yes, the increase in the national living wage from £8.91 to £9.50 for people over 23, and the hikes to the national minimum wage from £8.36 to £9.18 for 21-to-22-year-olds, and from £4.30 to £4.81 for apprentices, are steps in the right direction, but they don’t adequately support employees’ financial wellbeing.
Although the changes in April will translate to around a £1,000 extra per year for many in full-time work, most of that increase will be absorbed by additional rises in taxes, universal credit cuts and higher energy bills. Many people will still struggle to make ends meet on these rates.
It also continues to flag the huge discrepancy in pay based on age. While the Equality Act 2010 includes an exception that states that it is not unlawful discrimination to pay workers of different ages at different rates, if their pay structure is based on the age bands set out in the national minimum wage legislation, employers do need to think carefully about the ethical stance they want to take and to help ensure the financial wellbeing of their employees.
At CIPHR, we want to ensure that all our employees are paid a fair wage that reflects the actual cost of living, and not just the legal minimum, which is why we have committed to paying the Real Living Wage. This is currently £9.90 outside London and £11.05 in the capital. It’s incredibly important to recognise the part we as employers play in supporting social mobility and reducing poverty, and this accreditation is a small contribution to this.
Claire Williams is chief people officer at CIPHR