23 Mar 2017

£500 Annual Rise for UK Workers Above 25 years

If you are above 25 years old and a full-time worker in the UK, you can line up for a pay rise after April 1. Then the National Living Wage (NLW) is due to rise with 4% based on the changes from Chancellor Philip Hammond’s Spring Budget.

The National Living Wage was first presented in 2015 by the former Chancellor George Osborne and launched with £7.20 per hour in April 2016, 50p more than the minimum wage of £6.70 at that time. The decision was taken under public pressure and, despite original fears, it didn’t reflect into massive cut backs of employees. The new rise from April this year will add another 30p which means that those working at average 38 hours a week will receive roughly about £500 pounds more over their annual salary. The aim of the government is the NLW to be £9 by 2020.

Minimum Wage and Living Wage

For lots of people is confusing if there is a difference between minimum wage (MW) and living wage (LW). The MW is the minimum payment per hours which workers are entitled by law. It varies according to the age of the employees. The age restriction is that they have to be at least school leaving age to ask for MW. The LW affects only workers at the age of 25 or above.

From 1 April employees aged between 16-17 will be entitled to £4.05 per hour, the ones between 18-20 – £5.60 and the ones between 21-24 – £7.05 per hour.

£7.50 – is it enough?

In 2001, members of the non-government social movement London Citizens launched the idea of the Living Wage. Behind the initiative were “parents in the East End of London, who wanted to remain in work, but found that despite working two or more minimum wage jobs they were struggling to make ends meet and were left with no time for community and family life.” In the next years, the campaign gained popularity among employers and public figures in 2008 launched into Living Wage Foundation which every year calculates independently the cost of living for an average employee in the UK. Currently the organisation has estimated that the actual Living Wage in the country is £8.45 an hour with almost a pound more for the London citizens due to higher prices in housing, food and transportation.

The Foundation, supported by big companies like Nestle, Burberry, KPMG and IKEA is constantly campaigning to the employers to pay the real LW to their workers “to ensure their employees can earn a wage which is enough to live on.”

The UK inequality

Although the UK is still one of the leading countries in Europe by minimum wage – highest one is in Luxemburg with an average £11.3 an hour and lowest in Bulgaria with £1.1 an hour – there is a big inequality between a worker on national living wage and a CEO in FTSE company. According to analysis published by Equality Trust, an organisation fighting for social fairness, an FTSE boss earns 386 times more than a regular worker. With an average annual salary of £5.3 million that means roughly about £13,600 an hour.

The Equality Trust published their report aiming to raise awareness and to compel the government to force big businesses to be more open about the pay gap between their highest and average positions. “We need far greater transparency on company pay practices to challenge poverty pay and executive excess at the same time. Only then can we create a sense of trust and common purpose essential to build an economy and society that works for all” the Equality trust executive director Wanda Wyporska commented.

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