As previously speculated, the upcoming Autumn Statement will be used to announce a rise in the National Living Wage to £9.50 an hour.
The National Living Wage is set to rise by 6.6 per cent from the 1st April 2022, rising from its current rate of £8.91 per hour.
This is set to impact employees aged 23 or over and is predicted to give full-time employees an extra £1,000 a year.
Similarly, the National Minimum Wage is also expected to see an uplift – increasing from an £8.36 hourly rate to £9.18 for those aged 21-22.
Apprenticeship salaries will also be boosted, up to £4.81 an hour from £4.30.
As Prime Minister Boris Johnson previously expressed, these changes have been made in line with the Low Pay Commission’s recommendations.
Responding to these upcoming announcements, Chancellor Sunak stated:
This is a Government that is on the side of working people. This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.
Kate Palmer, HR Advice and Consultancy Director at Peninsula, described how these changes could be the third-highest annual rise since the financial crash in 2008. She further explained the impact this could have on HR:
It’s expected that a similar increase will be applied across all age bandings of the national minimum wage rates, as well as to payments associated with family-friendly leave, for example, maternity, paternity, adoption, shared parental, and parental bereavement pay.
The increase will likely also be in place for statutory sick pay entitlements; however, this may mean a subsequent rise to the lower earnings limit, which employees must meet to be eligible for most statutory payments.
Organisations should prepare their payroll teams to manage the changes to take-home pay and update any associated policies, so staff are aware of the new pay rates. This increase in demand on payroll and HR teams may mean that organisations will have to recruit additional people, so it could also be beneficial to review recruitment strategies now, to ensure there are sufficient staffing resources in place.
A spokesperson for the Recruitment and Employment Confederation (REC) also described this increase in pay as the Government returning to its initial plans but expressed concern about how to improve prospects for low-paid workers:
This rise is a return to the aim of raising the Minimum Wage to two thirds of median average wages by 2024, after a pandemic-inspired slowdown last year.
In deciding the rate can get back on path in one year rather than two, the LPC has concluded that the strong pay growth suggested by REC surveys will persist – though this will put pressure on sectors like care and hospitality.
The big unanswered question is about progression from lower-paid roles – too many workers are locked out of supported training by the inflexibility of the apprenticeship levy. We need a reformed model, where temporary and flexible workers can do shorter bursts of training that reflect labour market needs and raise their pay.
Finally, Nye Cominetti, Senior Economist at the Resolution Foundation added that the “high headline increase would be a smaller real rise than some recent years, given that inflation is likely to be over 4 per cent by April 2022”.
Ultimately, the Chancellor’s Autumn Statement later this week is expected to set out all the increases in pay which will come into force from April 2022.
Monica Sharma is an English Literature graduate from the University of Warwick. As Editor for HRreview, her particular interests in HR include issues concerning diversity, employment law and wellbeing in the workplace. Alongside this, she has written for student publications in both England and Canada. Monica has also presented her academic work concerning the relationship between legal systems, sexual harassment and racism at a university conference at the University of Western Ontario, Canada.
