National minimum wage rises to £6.95

Money cash 430

The national minimum wage has increased from £6.70 to £6.95 an hour for employees aged 21-24 years old.

The higher national minimum wage rates, which came into effect on 1 October 2016, include a 25p increase for 21-24 year olds and 18-20 year olds, a 13p rise for 16-17 year olds, and a 10p increase for apprentices.

The national minimum wage now stands at £5.55 an hour for staff aged 18-20 years old, £4 an hour for 16-17 year olds, and £3.40 for apprentices.

The national living wage rate of £7.20 an hour applies to employees aged 25 and over.

Greg Clark, business secretary, said: “The government promised to create an economy that works for all and today’s increase means our lowest paid workers will benefit from their largest pay rise since the recession. This will make a real difference to hardworking people up and down the country and means for the vast majority of workers, the national minimum wage is at its highest level in real terms.”

Guy Stallard, director at KPMG UK, said: “It is important we tackle the issue of low wages for the younger generation, and this is a good first step towards achieving this. Low pay blights the prospects of the young and more than two thirds (72%) of 18-21 year olds earn less than the voluntary living wage (paid at £8.25 nationally and £9.40 within London). This lack of financial freedom means those finishing school and university cannot fly the nest and gain the independence other generations have enjoyed, despite being in employment.

Sign up to our newsletters

Receive news and guidance on a range of HR issues direct to your inbox

This field is for validation purposes and should be left unchanged.

“As employers we can take active steps to address this, by paying the voluntary living wage. This also delivers real and tangible business benefits. In our own firm it has improved staff morale and driven a rise in service standards, improved the retention of staff and increased our productivity.

“It may not be possible or practical for everyone, but all organisations need to do what they can to address the problem of low pay. Of course, change cannot happen instantly, but making an initial assessment is an important first step.”