Minimum wage to rise to £12.10 an hour from April 2025 – what you might want to know

In a money move that will have cash registers ringing, over a million low-paid workers are set to pocket a 6 per cent pay hike next year. The Low Pay Commission wants to up the national living wage to £12.10 an hour in April 2025.

And get this they might even push for it to be higher before the budget, thanks to Labour rejigging its game plan to nail down a “genuine living wage”.

Younger workers between 18 and 20 could see an better rise as ministers mull syncing their salaries with those over 21. However business leaders are sounding the alarm over these fatter paycheques and extra worker rights fearing it might make them hit the brakes on hiring new talent.

Right now, the living wage is £11.44 per hour, above inflation rates but Labour is pledging more action to help the poorest paid, with Deputy Prime Minister Angela Rayner’s pledging to “raise the floor on wages”.

Meanwhile, the commission’s keeping an eye on wage growth, ready to suggest bolder hikes if the numbers stack up, while also willing to put their foot down on rises to sidestep any “significant job losses”.

Currently, workers aged 18 to 20 are legally entitled to a lower wage of £8.60 per hour, but the commission has been instructed to work towards “a single adult rate”. As a result, it plans to propose “larger increases for the 18 to 20-year-old rate” compared to those over 21.

Nye Cominetti, from the Resolution Foundation think tank, has downplayed the dramatic tone of Labour’s language regarding the changes, stating that the minimum wage hikes have traditionally outpaced inflation, yet indicating future increases may be steeper. His analysis, centered on the impact of these rises on low-paid workers, suggests that while there haven’t been job losses associated with a climbing minimum wage so far, caution is advised for further escalations.

“As you go higher the risks rise and you need more careful consideration of how you trade those off,” Cominetti explained. “What size of employment effect are you willing to tolerate for higher pay? We’ve never had a clear answer to that partly because no politician wants to say ‘our policy is costing jobs’. But at some point those decisions become material.”

Tina McKenzie from the Federation of Small Businesses board highlighted a growing wariness among companies when hiring, attributing it to the ascending minimum wage.