In November, when he shared his Autumn Statement with the nation, Jeremy Hunt announced a 9.7% increase to the National Living Wage (NLW) from 1st April 2023, as well as increases to National Minimum Wage (NMW). What seemed like a far-off change three months ago, is now speeding towards us at a rapid pace!
What are the changes?
The government is committed to making the NLW equal to two-thirds of median earnings for workers aged 21 and over by 2024, and it is thought that the upcoming increase is expected to put them in a strong position to achieve this. In a bid to help workers cope with rising prices, the National Living Wage will be increased by 9.7%, so that workers aged 23 and older will receive an hourly rate of £10.42. The increase in NLW will represent a wage increase of over £1,600 to the annual earnings of a full-time worker, and is expected to be beneficial to over two million low-paid workers. Given the current recession the country is facing, the increased wages will be welcomed by those who receive them.
Not only this, but workers across each of the NMW categories will receive a wage increase from 1st April 2023, including a 10.9% increase for the 21-22 age group. This means that workers aged 21-22 will be paid an hourly rate of £10.18 going forward.
The full breakdown of wage increases:
| Wage group | Current hourly rate (£) | Hourly rate from April 2023 (£) | Change (%) | Absolute change (£) |
| Age 23+ (National Living Wage) | 9.50 | 10.42 | 9.7 | 0.92 |
| Age 21-22 | 9.18 | 10.18 | 10.9 | 1.00 |
| Age 18-20 | 6.83 | 7.49 | 9.7 | 0.66 |
| Under 18 (but above compulsory school leaving age) | 4.81 | 5.28 | 9.7 | 0.47 |
| Apprentice | 4.81 | 5.28 | 9.7 | 0.47 |
How will this impact your business?
The upcoming wage increase is inevitably a welcome relief to minimum-wage workers. However, as SMEs continue to face the cost-of-living crisis and lasting effects of the pandemic, we understand how increased costs of employment may create further challenges for your business operations. To avoid being caught off-guard when the new wages come in on the 1st of April, it’s a good idea to use the opportunity to re-evaluate your finances, so that you can accommodate the changes.
We can help with a financial assessment to analyse your costs and check that the new payrolls are viable for your business. Understanding this will ensure that when the 1st of April comes around, you are not in breach of the minimum wages. You’ll also need to remember that you’ll need to account for the increase in national insurance contributions that you will have to pay as a result of wage increases.
The higher wages could, in fact, benefit your business. The changes are hoped to lead to happier and therefore more productive employees, which will in turn be reflected in your business’ success!
For more advice, speak to Chris Barlow:
+44 (0) 1 942 816 512
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