The UK government announced its budget on Wednesday, stating that up to 2 million UK workers will receive higher pay beginning next April as a result of a minimum wage increase. Over the age of 23, the minimum hourly salary will rise by 6.6 % to £9.50 ($13). The increase means that a full-time worker will receive a further £1,074 per year before tax.
The chancellor, Rishi Sunak, previously stated that the pay rise ensures that they are making work pay and that they are on track to meet their target of ending low pay by the end of this parliament. The National Living Wage is the name given to this level of remuneration. A livable wage is defined in ETI Base Code clause 5 as “enough to meet basic needs and provide some discretionary income.”
This level of pay is called the National Living Wage. ETI Base Code clause 5 describes a living wage as “enough to meet basic needs and to provide some discretionary income.”
But the question remains the same that is this increase sufficient to sustain families facing a cost-of-living crisis?
The National Living Wage rise is more than double the existing level of inflation of 3.1 %. According to the Institute for Fiscal Studies, inflation would take up a large portion of the rise in the living wage.
The lower-income households spend a huge portion of their salary on energy bills, they could come under a lot of pressure if energy price spikes.
Following natural gas prices hitting new highs in August, the UK regulator for the gas and electricity sectors stated that the price ceiling shielding up to 15 million consumers from rising bills may go up by 13%. In April, a further hike in the cap is anticipated.
While this increases wages for full-time minimum wage workers by almost £1,000 per year, individuals on Universal Credit will only see a £250 gain in disposable income because their taxes increase and their assistance receipt declines as their earnings rise, according to a senior research economist Tom Waters.