From 1st April 2023, the National Living Wage and National Minimum Wage will rise by an average of nearly 10% across the board (9.94%), helping to support the lowest paid workers but potentially causing a further burden on the businesses employing them.
Setting records but keeping pace
The increase, which was announced by the Low Pay Commission in November 2022, will be the largest single rise to the National Living Wage since its introduction in 2016. The National Living Wage refers to the minimum hourly rate paid to anyone aged 23 and above, with the National Minimum Wage referring to age related categories covering workers between 16 and 22, and apprentices. The National Minimum Wage was introduced by Tony Blair’s Labour Government in the 1990s.
The rise of almost £1/hour for the Living Wage will see the salary for a full time worker increase by more than £150/month. The increase comes at a time of rising costs and high inflation so will undoubtedly be welcomed by many struggling to make the sums add up at home. The Low Pay Commission, outlining their recommendations back in November, also made clear that this increase ensures the Government will remain on course to hit a target which will see the National Living Wage equal to two-thirds of median national incomes by 2024.
| New Rate from April 2023 | Current rate to March 2023 | % Change | |
| National Living Wage | £10.42 | £9.50 | 9.70% |
| 21-22 Year Old Rate | £10.18 | £9.18 | 10.90% |
| 18-20 Year Old Rate | £7.49 | £6.83 | 9.70% |
| 16-17 Year Old Rate | £5.28 | £4.81 | 9.70% |
| Apprentice Rate | £5.28 | £4.81 | 9.70% |
A burden for business?
Whilst the increases announced will be a blessing for some and will help staff with the cost of living, they may be seen as something of a burden for companies that will have to absorb the additional cost – with no government support or tax breaks to help them. Businesses face many of the same pressures as individuals right now with high energy costs, increases in the price of raw materials and general rises in operating costs. So, the timing of the changes to the minimum wages are less than ideal.
Manufacturing businesses, agriculture and the hospitality and leisure sectors are likely to be hit hardest as they traditionally have high numbers of staff on minimum wage salaries. They have already been impacted by inflationary pressures and less disposable income, resulting in reduced revenue. For the pub sector in particular, this increase comes on the back of record numbers having to close their doors in 2022.