Posted 08.01.20

The government have recently announced that the National Living Wage is set to rise in April. This will mean a salary rise for those on the lowest wage, but what exactly are the benefits of this announcement? How does it affect businesses and their employees?

What is the National Living Wage?

The National Living Wage is the name given to the minimum wage level that is payable to adults over the age of 25. Currently, the National Living Wage is £8.21 an hour, but as of April, this will increase to £8.72 an hour. This is four times the amount of inflation, and the government has described it as ‘the biggest cash increase ever.’

What does it mean for employees?

For most, it means more money! The new National Living Wage means employees aged 25 and over will earn an extra 51p an hour than what they did before. Younger workers will also see their wage boosted (depending on their age) with 21 to 24-year-olds seeing a 50p increase to £8.20 an hour.

However, it’s also worth remembering that this new rate does still not match up to the real living wage, which is calculated to meet the real cost of living such as food, clothing and household bills.

What does it mean for businesses?

A lot of businesses have raised concern over the announcement. The British Chambers of Commerce have warned that this sharp increase would put a lot of pressure on companies’ cash flows and have urged the government to reduce costs elsewhere. The Federation of Small Businesses is also wary of the increase in the National Living Wage. They say it could lead businesses to recruit fewer people, cancel investment plans or consider redundancies.

On the other hand, some companies and federations do not think the government have gone far enough, as we mentioned above, this increase does not match up to the real living wage. Frances O’Grady, general secretary of the Trades Union Congress, said:

“This is a long-planned raise, but it’s also long overdue. Workers are still not getting a fair share of the wealth they create. And in-work poverty is soaring as millions of families struggle to make ends meet. No more excuses, working families need a £10 minimum wage now, not in four years’ time.”


At Cordant People, we welcome any changes in government policy that benefit working people and the careers they work in. Although it does not yet meet the real living wage, it’s still a positive step in the right direction!

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