The minimum wage is the lowest remuneration an employer can legally pay their employee in the UK. Like many other Western countries, the UK government reviews the living salary on a yearly basis. To come up with the new rates, the government consults the Low Pay Commission (LPC), a body that was established in 1997 as a non-departmental public body.
The UK government has different wage rates for people in different age groups. For example, people over the age of 23 get a higher minimum wage compared to those under 18 years old. Until 2009, the main rate was for people aged 22 and above. From October 2010, this was adjusted to 21 and over.
The National Living Wage was introduced in April 2016 and previously applied to people aged at least 25. Since April 2021, the National Living Wage has been extended to workers of 23 or more years.
Here are the figures for the minimum wage 2024 in the UK (per hour):
- Apprentice- £6.40
- Under 18- £6.40
- 18 to 20 years old- £8.60
- 21 to 22 years old- £11.44
- 23 and over- £11.44
- Real living wage outside London- £12.00
- London living wage- £13.15
Although the rate is set per hour, it applies to all workers in the UK. Offshore workers are also entitled to this salary. People working casually or part-time also have to earn the minimum or living salary. The new rates will come into effect on the same day across the nation (in Wales, Scotland, Northern Ireland, and England).
Some of the categories of workers who aren’t entitled to the minimum salary include:
- Self-employed individuals
- Unpaid volunteers
- Company directors
- Family members living with their employers
To calculate the correct rate of pay, an employer will have to consider the number of hours the employee spent working. The working hours include the following:
- The amount of time spent at work
- Time spent travelling as part of work
- Work lunches
- Commute travel time (excludes standard commute to workplace)
- Working on call
What is the National Minimum Wage?
The National Minimum Wage refers to the lowest amount an employer can pay workers under the age of 23. It applies to full-time workers, part-time workers, casual workers, agency employees, and in some cases, apprentices as well. The government introduced the National Minimum Wage to protect workers from exploitative employers. As noted earlier, the national minimum salary for people under the age of 18 is £6.40 per hour. It goes up to £8.60 for people between the ages of 18 and 20. For people aged 21 or 22, the minimum compensation is £11.44 per hour.
The National Minimum Wage can be contrasted with the National Living Wage. This refers to the minimum wage rates for people aged 23 and above. Following advice from the Low Pay Commission, the government lowered the age from 25 to 23 in 2021. The age will be lowered further to 21 in April 2024.
The current national living salary is £10.24 per hour. But it will be raised to £11.44 per hour in April 2024.
Who Qualifies for the Apprentice Wage?
An employee will earn the apprentice minimum wage rates if they’re in their first year of work. The age isn’t considered at this point. However, after completing the first year, the employer will have to pay the apprentice the minimum or living salary for their age bracket.
The wage calculator for apprentices includes payment for the following:
- Their normal working hours
- Training that’s part of the program (about 20% of the normal working hours)
- Math and English classes
Remember also that apprentices are entitled to 20 days of paid holiday per year. Bank holidays are included in addition to these holidays.
What is the Real Living Wage?
The real living salary is based on the cost of living in the UK and London. This isn’t mandatory and is paid voluntarily by over 14,000 employers in the country. The real living salary in the UK is £12.00 an hour, while that of London is £13.15 an hour. Companies that pay the real minimum salary believe that all workers in the country need a salary that covers their everyday needs. They include half of the FTSE 100 companies, including popular brands like Everton FC and Ikea. The real living salary is calculated by the Living Wage Foundation, a Citizens UK initiative. The company considers factors like inflation and the cost of housing when deciding on this wage.
How Does the UK Minimum Salary Compare to the Rest of Europe?
The UK minimum wage 2024 is currently one of the lowest in Western Europe. Still, it ranks as the fifth highest rate in the continent. The countries with the higher minimum salaries compared to the UK are Luxembourg, France, the Netherlands, Belgium, and Ireland. It’s worth noting that some countries in the EU don’t have a minimum salary. These include Denmark, Italy, Finland, Sweden, and Austria.To get a better picture of the situation, it’s worth considering the cost of living in different parts of Europe. The UK has one of the highest costs of living in the world, and that’s one reason why wages in the country are considered very low. This is even after the government increased the minimum wage almost consistently since 1999.
As an example, a person earning minimum salary in London won’t be able to afford more than a one-bedroom flat, and that’s still assuming they don’t spare anything for food, clothes, or utilities.
Housing has been a major point of concern for the government. The conservative party is trying to solve this issue by building 200,000 homes for new renters. These will be available to people renting their first homes (must be under the age of 40). These homes will be sold at a discount of 20%. Although the plan was first unveiled in 2015, it is unclear whether it will ever come to fruition. In mid-2018, the government announced that it had spent £250 million on buying land to build affordable properties. However, work on the actual buildings is yet to begin.
At the moment, the government is aiming at building 300,000 homes a year from the mid-2020s.
Minimum salary is still taxed in the UK, although there are discussions on making this level of income tax free. Based on an employee’s family situation, they may be entitled to tax credits. The government also considers the number of hours worked when deciding on tax credits. A single adult working for at least 30 hours will qualify for these benefits.
Concerns Over Raising Minimum Wage
Raising the minimum salary will usually improve the living standards of workers. However, there are several reasons why the rates can’t be raised drastically. One argument against increasing the compensation is that it will harm the employment rates for prospective workers. This is especially an issue for people under the age of 25. As it is, youth unemployment rates in the UK are very low.
Something else that is always mentioned is that businesses will struggle to stay afloat if the minimum salary is increased sharply. This will eventually lead to mass layoffs and discourage job creation. Employers will also be likely to discriminate against young employees if they have to be employed at very high salaries. The state will also be affected by the slow job growth rate. This pinch will especially be felt in the social care sector.
Even with these concerns, it is worth mentioning that a large proportion of the workforce and employers in the UK support increases in the minimum salary.