Millions of low-wage workers to get pay raises by 2025 with minimum wage hike

With the rising cost of living impacting families across the UK, any news of rising wages comes as a welcome relief.

For millions of low-wage workers, there is good news ahead: the national minimum wage will rise, which will increase the income of more than 1.6 million people.

Here’s a look at what this means, who will benefit, and what it could mean for people trying to make ends meet.

What is changing with the minimum wage?

The national minimum wage, also known as the “national wage” for workers aged 21 and over, is the lowest legal hourly rate an employer can pay its workers.

The rate is revised annually to help keep wages in line with national wage rates.

According to recent reports, we expect a 6% increase by 2025, which would see the national wage for over-21s rise from £11.44 an hour to £12.12.

This would be a reasonable increase for those in low-wage jobs, many of whom are trying to balance a tight budget in the face of everyday expenses.

The increase will affect workers of all age groups, with younger workers (aged 18-20) also keen to get a raise to bring their rates closer to those over 21.

This could mean a much-needed wage increase for young workers, many of whom work in the retail, hospitality, and other traditionally low-wage industries.

Why is the minimum wage rising?

The government reviews the minimum wage every year, and this year, ministers have set a target of two-thirds of the national average wage.

The Low Pay Commission, which advises on minimum wage levels, recently suggested a rise of 5.8% based on this guide, but with further increases in earnings across the UK, it looks like we’re looking at closer to a 6% rise next year.

By aiming to keep the minimum wage in line with the average wage, the government hopes to provide better financial stability for low-income families.

How does the minimum wage compare to the real living wage?

The “real living wage” is another hourly wage rate in the UK, but it is different from the minimum wage.

Unlike the national minimum wage, the real living wage is based on the cost of daily essentials, calculated by the Living Wage Foundation.

Although employers are not required by law to pay a living wage, many choose to register for it to ensure they are paying employees enough to cover basic living expenses.

This rate is set to rise by 5% next year, providing £1,170 a year for those outside London and £1,365 for those living in the capital.

The increase aims to keep pace with rising costs, from energy bills to food.

Current prices and new prices for 2025

From now on, here’s a quick look at minimum hourly wage rates by age group:

• 21 and over: £11.44, expected to rise to £12.12
• 18 to 20: £8.60, which is likely to see a rise bringing it closer to over 21 levels
• Under 18 again StudentsPrice: £6.40

In comparison, the real living wage currently provides higher hourly rates than these statutory minimums and is updated to reflect the actual cost of living across the country.

When can workers expect a pay rise?

The new wage rates are expected to come into effect in April 2025, which coincides with the start of the new tax year.

While this salary increase will make a difference, it must be remembered that inflation and the rising cost of living remain a challenge for many families.

This planned increase in the minimum wage is a positive step, providing a welcome boost to low-wage workers.

If you or someone in your family is on a low income, it’s worth planning ahead for April to see how this increase can help cover important expenses or even provide a little breathing room in your budget.

While it won’t solve every financial challenge, it is a step towards better pay for millions of people across the UK, giving them more security in an uncertain economic climate.