Prime Minister Boris Johnson is expected to announce a National Living Wage increase to £9.42 an hour.
The rise will be introduced as part of the government’s plans to end the “low-wage, low growth economy”.
The Times reports that Boris Johnson has taken the recommendations of independent advisors to raise the National Living Wage by 5.7 per cent. For somebody that works a 35-hour week, that would get them an extra £928 per year before tax.
It’s expected to be announced in his speech at the Conservative Party Conference later today. The £9.42 raise would be the third biggest annual rise since the financial crash.
Johnson is expected to say that he has the “guts” to change and level up the UK. “After decades of drift and dither, this reforming government, this can-do government that got Brexit done, is getting the vaccine rollout done and is going to get social care done,” he is expected to say.
Recommendations on the rate of minimum wage are made each year by the Low Pay Commission, an independent expert advisory body. An April report estimated that its 2022 recommendation would be £9.42 an hour. Sources believe that the final recommendation could rise to £9.45, but not much more than that.
The increases are part of a government-set target for the National Living Wage to reach two-thirds of median earnings by 2024.
Yesterday it was revealed that some cabinet ministers think that businesses have become “drunk on cheap labour”. The Prime Minister wants businesses to offer higher pay to attract more staff into sectors where there are shortages.
A recent report from the Resolution Foundation also said: “Improvements in conditions would be very welcome given the poor record that many migrant-dense industries currently have when it comes to labour market rights.”
However, the question remains as to where cash-strapped small firms would find the extra money for employee pay. A significant wage rise could hit these businesses as they struggle with the aftermath of the pandemic and prepare for increased national insurance contributions.