The National Living Wage, which will be introduced in April, will make workers feel more positive, the Treasury has said.
According to a survey of 1,200 people on how the increase in pay for the over 25s will affect them, more than 70 per cent said they will feel more positive for themselves and their families. More than half (59 per cent) said they will feel more motivated to work.
Chancellor George Osborne announced details of the National Living Wage in last summer’s budget. Coming into force on April 1, it will see the current minimum pay rate of £6.70 for those aged 25 and over rise to £7.20.
Cash and real terms boost
More than one million people are expected to benefit from the increase, with many workers’ pay packets boosted by up to £900 per year. This is the largest annual increase in minimum wage rates – in cash and real terms – in any G7 country since 2009.
Osborne said: “The new National Living Wage is an essential part of building the higher wage, lower welfare, lower tax society that Britain needs and it’s great to see that over a million people will see their living standards boosted when this comes into force on April 1.
“Britain deserves a pay rise and this one-nation government is making sure it gets one, helping more people have the security of a higher wage to provide for themselves and their families.”
Business secretary Sajid Javid added: “We are building a more productive Britain and giving families the security of well-paid work. This is a step up for working people, so it is important workers know their rights and that employers pay the new £7.20 from April 1 this year.”
Businesses must take steps
The survey coincides with the launch of a TV commercial today (18 January), aimed at making businesses and workers aware of the National Living Wage and what it means for them.
As part of the awareness campaign, the government has published a four-step guide for businesses on the living wage website, asking firms to:
- Check you know who is eligible in your organisation;
- Take the appropriate payroll action;
- Let your staff know about their new pay rate, and
- Check your staff under 25 are earning at least the right rate of National Minimum Wage.
HMRC will have responsibility for enforcing the new National Living Wage in addition to the National Minimum Wage from April 2016 and will take firm action where an employer fails to pay the correct wage.
The National Living Wage follows recent rises in the National Minimum Wage rates to:
- £6.70: For 21s and over
- £5.30: For 18 to 20-year-olds
- £3.87: For under 18s
- £3.30: For apprentices (the rate applies to all apprentices in year one of an apprenticeship, and 16-18 year old apprentices in any year of an apprenticeship).