Budget confirms major minimum wage change as young workers to get record boost
by Catherine Addison-Swan · ChronicleLiveYoung workers across the UK will receive a record-breaking pay rise next year as the Government phases in a major change to the minimum wage.
Chancellor Rachel Reeves confirmed in Labour's first Budget that workers aged 18 to 20 will see their hourly wage increase 16.3% in April 2025, from £8.60 to £10. It marks the latest step in moving towards a single minimum wage rate for all adult UK workers, in a move that has long been called for by campaigners.
Until this year, only workers aged 23 and over were entitled by law to the National Living Wage, while younger people in the workforce could be paid lower rates. This was changed by the Conservative Government in April 2024 so that all workers aged 21 and older received the National Living Wage - but there is still currently a lower minimum wage rate for employees under 21.
Speaking to the Commons on Wednesday, Reeves said: "I know that for working people up and down our country, family finances are stretched and pay checks don't go as far as they used to. For the first time, we will move towards a single adult rate, phased in over time, by initially increasing the National Minimum Wage for 18-20 year olds by 16.3% as recommended by the Low Pay Commission, taking it to £10 an hour."
This "phased in" process is likely to see the gap close gradually between the National Minimum Wage and the National Living Wage, until all workers aged 18 or over are legally entitled to the same minimum hourly pay. The Chancellor also confirmed that the National Living Wage will increase next April, rising by 6.7% from £11.44 to £12.21 per hour.
This boost will be worth an extra £1,400 a year for an eligible full-time worker, in what the Government has described as "a significant step towards delivering the manifesto commitment to make sure the minimum wage is a genuine living wage".
However, this falls short of the new Real Living Wage rates that were confirmed last week, spelling a 5% pay rise for nearly half a million employees as the hourly rate increased to £12.60 an hour or £13.85 for workers in London. The Real Living Wage is a wage rate based on living costs that is paid voluntarily by more than 15,000 businesses in the UK, and now works out at £2,262 a year more than what an employee on the National Living Wage would earn.
Baroness Philippa Stroud, Chair of the Low Pay Commission, said: "The Government have been clear about their ambitions for the National Minimum Wage and its importance in supporting workers' living standards. At the same time, employers have had to deal with the adult rate rising over 20% in two years, and the challenges that has created alongside other pressures to their cost base.
"It is our job to balance these considerations, ensuring the National Living Wage provides a fair wage for the lowest-paid workers while taking account of economic factors. These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time."
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