Autumn budget 2022: The government has agreed to raise the national living wage by 9.7% from April 2023.
In his autumn budget address to the House of Commons, Chancellor of the exchequer Jeremy Hunt (pictured) stated that he had accepted recommendations made by the Low Pay Commission to increase the national living wage to £10.42 for 2023, representing a pay rise of more than £1,600 for the average full-time employee.
The national living wage is the rate set by the government as a legal minimum for employees aged above 23. For 2022, it was set at £9.50 per hour.
This measure is expected to benefit more than two million of the lowest-paid employees in the UK. The move is part of the government’s attempts to reach a national living wage rate of two-thirds of median UK earnings by 2024.
Hunt said: “This government introduced the national living wage, which has been a giant step in eliminating low pay…[this] is the largest increase in the UK’s national living wage ever.”
Alan Price, chief executive officer (CEO) of BrightHR, said: “Employers should work with HR and payroll teams to implement the change and communicate it with the wider workforce. However, it’s important to remember that the [national living wage] only applies to workers aged 23 and over; the remaining rates in the national minimum wage structure are still to be announced.
“While the increase is welcome news for employees, many will still struggle as inflation and the cost-of-living continues to put pressure on household incomes. As such, employers should ensure there is wider support in place to facilitate positive financial wellbeing.
“Similarly, increased wage bills may cause concern for employers which are facing soaring expenses in all parts of their business. This could lead to tough decisions and the need for organisational changes. Where this is this case, employers must make sure they follow fair processes and consult fully with their workforce.”
Alexandra Farmer, head of team and solicitor at WorkNest, added: “I expect a number of businesses will assess their workforce. Do they need all the employees they have? Can they make efficiencies to allow them to reduce the overall headcount? If so, we could be looking at an increase in redundancies over the next few months. It’s likely businesses will want these completed ahead of the rise in April to limit costs.”