National Minimum Wage 2016

The National Minimum Wage (NMW) is the minimum wage per hour a worker is entitled to in the United Kingdom. These rates are reviewed yearly by the government and are advised by the independent body Low Pay Commission (LPC).

 

In March 2015 the government announced that on 1 October 2015 the hourly adult rate of National Minimum Wage would rise by 20p, from £6.50 to £6.70 (3%). This is the biggest real-terms increase since 2007 and is estimated to benefit more than 1.4 million of Britain’s lowest-paid workers.

The changes in the past five years are visible in the table below. In 2010 the age groups were slightly altered and an apprentice bracket was also introduced. Before that the age groups were divided slightly differently and there was no applicable minimum wage for apprentices.

 

From April 2016, all workers aged 25 and over are legally entitled to at least £7.20 per hour.

Current Rates

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
2016 £7.20 £6.70 £5.30 £3.87 £3.30
2015 £6.70 £6.70 £5.30 £3.87 £3.30
2014 £6.50 £6.50 £5.13 £3.79 £2.73
2013 £6.31 £6.31 £5.03 £3.72 £2.68
2012 £6.19 £6.19 £4.98 £3.68 £2.65
2011 £6.08 £6.08 £4.98 £3.68 £2.60
2010 £5.93 £5.93 £4.92 £3.64 £2.50

 

When looking at minimum wage per month, The United Kingdom is currently at the highest amount in 15 years. After a drop between 2007 and 2009, it has gradually been rising. Although this is a positive development, it is still one of the lowest minimum wages in Western Europe.*

 

 

 

Minimum Wage per Month

Minimum Wage Europe

Unemployment Rate

Unemployment Rate

* National minimum wages before tax deduction and converted into Euro.

The announcement has been subject to discussion. While many argue that the increase is not enough, others argue that setting higher minimum wages would lead to fewer job opportunities.

While most people would agree the 3% increase might not seem a lot at first sight, there are other factors that need to be taken into account – such as inflation, prices of essential goods and housing.

Inflation has decreased to 0% in March 2015 and the Bank of England expects inflation to remain around 0% for the most of this year. This means that unless it would suddenly increase over the next few months, the 3% increment would actually mean 3% in real terms upon the introduction of the new rates in October.

In addition the price of essential goods have also been falling sharply. Food and non-alcoholic drinks dropped at an annual rate of 2.5% since 1997. Transport dropped at an annual rate of 2.8%. Clothes and shoes dropped 3.7% month-on-month. Even gas and electricity prices decreased a little. The decrease in prices means that one will have more money to spend after buying the essentials. Thus the standard of living is improved (in the short term at least).

Prime Minister David Cameron has also pledged to take everyone earning less than £12,500 out of Income Tax altogether and pass a law to have a Tax-Free Minimum Wage. This would also give a minimum wage worker more to spend.

The one major area where inflation remains high is housing – which affects everyone but especially the poorest. To put this into perspective; a person earning minimum wage would only just be able to afford a one bedroom flat in London. Providing they don’t eat, user power, pay council tax or wear clothes.

However the housing issue is something the Conservative Party has also pledged to do something about in their manifesto – they intend to build 200,000 new starter homes 20% below the market price for first-time buyers under 40. They also wish to extend right to buy, a policy for tenants of housing associations (private, not-for profit bodies that provide low-cost housing) to enable them to buy their home at a discounted prices. So the government does have plans in place to increase the supply of affordable housing.

With over 1.4 million people employed at minimum wage and with one of the lowest unemployment rates in Europe, one could argue that there is a good balance between offering a fair minimum wage whilst simultaneously not decreasing work opportunities. And while the new wages do not necessarily immediately tackle the housing problem in the short term, it will improve the standard of living for most.

 

 

 

 

Share on Google+1Share on Facebook0Tweet about this on TwitterShare on LinkedIn9Email this to someone

 

42 replies
    • Leya says:

      No wonder there is so much poverty in the UK. 2.68 an hour for an apprentice in 2013 is diabolical, if the government want to keep talented workers and banish crime everyone should be on at least £ 14.00 per hour minimum wage. We are like third world country what whilst bankers get million pound bonuses. Its sick and perverted, led obviously by the sick and perverted. Who says bankers do a better job or a more skilled than a person who cleans a hotel room and ensures it is spotless clean and hygienic for the next customer, or a nurse who works long hard hours,… NO equality at all.

      Reply
      • tim says:

        Apprentice wages are low as the company spends time & other resources in training these people and ensuring that the are correctly qualified for the job they are undertaken. The minimum wage is a joke as some people are not worth the minimum wage.
        If you put everybody on £14/hr then there is no incentive to train or work hard and we become a deskilled country. Also you need to be prepared for the cost of living to rise significantly as the supermarket stacker will be earning the same amount as the skilled engineer! and you will still expect to pay 50 pence for a pint of milk.

        Reply
        • jbobs says:

          Tim, I’m sorry but thats nonsense. You need to value your staff more. The apprentice is getting training so that you to offer out his services in order to make money from them, you arent a rich benefactor providing training out of some sort of altruistic community spirit. Low pay is not a marker of a successful economy, its a indication that an economy is based on a low tech, low potential for for social mobility, low expectation model. Compare Germany with China, you are espousing that we should be more like China, I would suggest that Germany would has the happiest and intellectually productive workforce.

          Reply
          • Mario says:

            Tim, actually for most people, rising wages, would incentive them to do a better job, work harder, not the opposite!

        • Apprentice with a brain says:

          The apprenticeship wage is low because it’s government funded, the government pays your company for the course and the company you train with pay you minimum apprenticeship wage + whatever is left over from your course. The government forks out as little money as possible, but you’re able to request a higher income should you have higher outgoings.

          Reply
      • Duncan Innes says:

        Apprentices are earning and learning. If we didn’t have a minimum wage people would be paid what they are worth. Why should the government tell me how much I should pay my staff? It should be a contract between myself and my staff. If I want to attract the best staff I will have to pay more, if they are unhappy they can leave.

        Reply
      • Ash says:

        Excuse me Leya, this is not a third world country. People in Britain have no idea how lucky they are to have a minimum wage. Try living in South Africa were the MONTHLY earnings are £136.37. That is what a third world country is like. So broaden your knowledge a bit and then talk about how rubbish your country is when there are people in the world, working harder than you and earning less than you. At least in Britain there is a minimum wage and companies have to adhere to that. You are more privileged than most people.

        Reply
        • Deb says:

          It may not be a third world country, but it it heading in that direction. The cost of living is going up, and wages are not keeping up with inflation.

          Reply
      • Londonjon says:

        It’d pretty obvious why professional bankers get paid better than similar skilled or people with a trade. It’s take much longer to qualify for that job and the responsibilitys are much higher. As a result of being paid more they pay much more tax and contribute much more to the economy. As for 1 mill bonuses that makes up less than 100th of 1%. Not sure what you mean by no equality, almost every bank or brokerage offers a graduate scheme where young people join as juniors then over time work their way up. I personally work in this industry and have done for over 12 years and I didn’t have a university educstion. I guess it’s all down to how much or want something or want to be able to blame someone else because you don’t have it. I hope this was helpful.

        Reply
        • Chris says:

          Wow, no wonder the economy is in decline, with fractured English like that and you say you work in the banking industry.

          Reply
      • dave says:

        who is gonna pay this £14 an hour?? im self employed with 2 staff and they already take home more than me… the rise to £7.20 means I lose nearly £1000 out of my yearly wage… further increases will mean even less for me.. my options are to cut their hours, let one of them go or increase my prices. none of which I particularly want to do.

        a worker should have a fair wage.. but it should also be fair for employers too. increasing wages too fast will have little to no benefit for anyone as itll just mean everyone increases their prices or starts laying people off. plus a lot of people on minimum wage have tax credits or other benefits…. when the higher wage kicks in they’ll just lose the credits… they wont actually have anything more in their pocket…

        Reply
        • Alun says:

          Well said Dave as nobody seems to be thinking of the small business man in all of this and I’m in a similar situation to you. If this carries on I will have no other option than to shut down my business and 8 people including myself and my wife will be out of work claiming job seekers.

          Reply
          • Louise says:

            Exactly! i have three small business, all in catering and we pay slightly over min’ wage; the staff do deserve more but the business can’t afford it without putting prices up and scaring away customers who are constanly looking for discounts or deals.

        • Thomas says:

          Spot on Dave, Im in similar situation here, we going to see how it goes for a few months but its looking like the only way I can continue to work and pay the mortgage is to close the workshop, lay off the two mechanics and go to a mobile workshop operation by myself. I doubt that my two employees would call this an improvement for them

          Reply
      • Max says:

        Not only there’s no equality at all but the gap between rich and poor is even widening.

        And what are peple doing about it?
        Absolutely nothing.

        Reply
  1. Emma jane dean says:

    I think that if the national minimum wage is going up as the
    Icing wage increases, it should be over 21’s as the minimum wage the now is anyone over the age of 21 gets at least £6.70. I know a lot of people between the age of 21-25 that keep a house and struggle to pay their bills including myself. It’s not just over 25’s that try keep a house and live at the same time. If the living wage should go up it should be over 21’s that get the same wage as everyone else.
    You will see a lot more homeless young people on the streets because they can’t afford to live.

    Reply
    • Tom says:

      I agree, I have to run a house on £6.70 per hour wage. The bills add up and I’m only left with £100 for shopping for the month, it’s not fair that because I’m 21 that my wage will not go up when every one else’s will next month. The government needs to understand that not everyone lives together or lives with their parents until they are 25 years old!

      Reply
      • Ryan says:

        Legally though you are defined as dependable upon your parents up until the age of 25.
        Regardless of whether you live on your own or not. I know friends who couldn’t get loans and other financial supports until they reached 25.

        Reply
      • Danny says:

        What is all this nonsense about ‘running a house’ on minimum wage? A lot of people earning well above the minimum wage have to live in a flat share. If you can’t afford to live out and within your means, move back home or get a flat share. Simple.

        Reply
  2. Jim Smith says:

    Last year I spent 50% of my take-home pay on rent, this year it is 60%. Not London. Too much weight here on the great news about shoe prices, imho!

    Reply
    • Jan Stockham says:

      The last minumum rise my boss decided to cut our hours…..he said he will do it again to save money. Can he do this ?????

      Reply
  3. Elliot says:

    The more it rises the more I have to cut my staffs hours or let people go catch 22 situation situation…
    When I raised this issue I was told to make my business more profitable…ok I’ll let some staff go and the government can pay…

    Reply
  4. Hubert says:

    It is about time the fat cats take a pay cut and pay the hard workers more, when will people realise that the operator’s, engineers, and the likes work really hard and long hours to keep the industry in motion and this generates money in this country, not the bankers or back benchers in government.

    Reply
  5. Preacher says:

    This is laughable. My employer has today told everyone that to pay for the increase in this wage they are stripping us of double pay for Sunday working, double pay for bank holidays and no more unsociable payments for working after 8pm. Brilliant. So what we get in one hand they take back with the other.

    Reply
    • MJ says:

      If all of the low paid workers went on strike, the high paid workers wouldn’t be able to do their jobs right? Imagine not being able to get your milk coz the corner shop is shut or the dairy farmer was on strike? Imagine the bus driver not turning up. Imagine the guy who you pay petrol money to not being there? Even the card machines are broken and the engineer is chilling. There’s no internet because they are on strike. There’s no emergency services because they are on strike…If this all happened at once, imagine the impact. It shouldn’t be needed, it is unsafe and ufair; but such is the UK in it’s current state.

      Reply
  6. Michael says:

    There is always going to be wage pressure in companies with marginal profitability. What the minimum wage does is limit the ability of businesses to get a subsidy by paying lower wages and expecting the benefit system to pick up the slack.

    i think it is right and proper that someone working full time should be paid enough to have a socially acceptable living standard, without requiring state support such as housing benefit hand tax credits, and whilst not perfect, minimum wage levels are finally waking up to this.

    Reply
  7. P says:

    I pay minimum wage, do I have to start paying a living wage to my 1 employee?
    Sometimes my employee gets more wages than me, as I am struggling to keep the business afloat. Obviously I would love to pay more but feel that this might finish my business.

    Reply
    • jaybobs says:

      P, There are two options, you pay a wage that someone can live on or you pay a wage that your employee cant live on. Why do you think your employee owes you a living?. If your business cant pay you both a living wage then its not a viable business.

      Reply
  8. Caroline says:

    Can a company pay under the minimum wage if staff have enforced breaks? Cleaning staff at a school have enforced breaks and hence are paid £7 per hour instead of £7.20 – is this legal?

    Reply
    • ellis says:

      I don’t think it is legal to pay under minimum wage irregardless of when and how long they work, some cleaners will work for a company which means they will work over holidays dependent on contract also i’m a cleaner and I get £8.26 an hour as well as school holidays off.

      Reply
  9. Peter says:

    Paying the latest minimum wage is fine but the local council who I do most of my work for and who I tendered on a 5 year contract, deceided due to rising costs for the last 4 years , that they cannot pay any rise due to cut backs in their funding despite an agreement we would be paid a 3/4% rise every year
    They however are paying their employees the new rates where do we find this cash to pay this rise with Insurance tax having risen for employers ins etc paternity pay for men , fuel prices which did fall now starting to rise again, new pensions to be paid endless costs and we cant raise the price of our services
    I agree with previous comments that it will result in hours reduction and in my case has led to me reducing staff and as soon as possible I intend to close the buisness and get a job after 30 years of running this company as the regulations also introduced by the EU are killing small companies off

    Reply
  10. Arnes Ramic says:

    Everyone should be paid equally, it is disgusting that two people of different ages would get paid differently for the same amount of work. We’re being segregated and categorised on every possible level for no reason.

    Reply
  11. john says:

    It has always been the same the problem is no government has the guts to stand up and say we are going to have a national maximum income as part of a prices and incomes policy.

    Reply
  12. Chris says:

    In a country in which we have equality rammed down our throats at every available oppurtunity why is an over 25 getting more money than people over the age of 21? People over the age of 21 have the exact same jobs and all the other responsibilities to shoulder as a 25 year old so how are they equal now George? answer me that. and this ridiculous suggestion that’s being put about by certain people in the goverment that the priority is to get the under 25s into work rather than give them a pay rise is neither here nor there and quite frankly an insult to anybody of intelligence. This is exploitation nothing more nothing less. The message from george Osbourne is clear people over the age of 21 are adults, should be expected to work as hard as an adult and have all the other responsibilities an adult has but just not earn the same amount of money that’s not right.

    Reply
  13. Zero says:

    I think many fail to see the main fact here. you can complain about our minimum wage but think, how much do those people in parliament earn? are they qualified to make decisions based on my country? is this country turning third world? I would like to say straight away it doesn’t take Jesus Christ or Albert Einstein to see how screwed this country is because of politicians. and just FYI if I got paid £14 an hour for working at Sainsbury’s then why should a nurse or soldier also get the same for doing a more important job than myself?

    let me be real here, our pay may be our concern or our opinion may be wages are unfair, but the politicians don’t care about you, they only want your money!

    Reply
  14. Joe says:

    My daughter is 19 and has just split up with her boyfriend. She would like to continue living in the flat. Due to the current wage structure she is only on £5.30 an hour and it won’t be until she is 21 that her wage will rise. She also cannot claim working tax credit until she is 25. That is what I call unfair Mr Osbourne. She is a sensible reliable hard working adult who likes her independance.

    Reply
  15. LC says:

    My daughter has just started working for a National Company. She will be 22 this year. Her wages are £6.04 per hour. Working often until midnight in the restaurant; she was told by her manager that she would have to rely on tips to make up the difference!! How can this be right? Surely a National Company can’t be allowed to get away with this? What can she do about it?

    Reply
  16. Josie Wentworth says:

    Why is the minimum living wage nearly double the basic state pension. Does it cost a pensioner less to just live?

    Reply
  17. Peter Thomas says:

    When i was in my twenties i worked on building sites as a forks driver. My hourly rate was £5.50 and i brought home over £200 per week. Now the rate has increased but so have the deductions. The government is trying to pull the wool over everyones eyes. The minimumwage is a publicity stunt designed to con youngsters into voting for them when in reality they have nothing for the lower class except use their contributions to pamper and molly coddle the upper class who have been handed the golden goose year in year out for most of my adult life

    Reply

Leave a Reply

Leave a Reply

Your email address will not be published. Required fields are marked *