National Minimum Wage Hike: Rachel Reeves Set to Announce 6% Increase in 2025
UK minimum wage set to rise by up to 6% in 2025, delivering pay increases for over a million workers. Learn more about the impact on low-income earners and businesses.
Rachel Reeves Expected to Announce 6% National Minimum Wage Increase in 2025, Benefiting Over 1 Million Low-Paid Workers.
The UK’s national minimum wage is set to increase by up to 6% in 2025, providing over a million low-paid workers with a substantial pay rise. According to sources close to the discussions, Shadow Chancellor Rachel Reeves is preparing to introduce the increase as part of a broader commitment to boost incomes for lower-wage earners. The upcoming rise could push the “national living wage” for those 21 and over to more than £12.12 per hour, up from the anticipated rate of £11.44.
This increase follows almost a decade of above-inflation adjustments to ensure the minimum wage remains at or above two-thirds of median earnings. In addition, Ministers are advocating for younger workers (18-20) to eventually be paid the same rate as older employees, helping to close age-related pay gaps.
Impact on Workers and Local Economies
Economists like Nye Cominetti from the Resolution Foundation have praised the expected rise as good news for low earners. Research indicates that minimum-wage increases empower local economies, as low-income earners tend to spend their wages in their communities, boosting small businesses and service sectors.
Paul Nowak, TUC’s general secretary, emphasized the importance of this wage increase in the context of ongoing cost-of-living pressures. “Any rise in the minimum wage strengthens local spending power and benefits local businesses,” he noted, countering arguments that wage hikes could negatively impact employment.
Potential Business Concerns: National Insurance Impact
While this announcement is expected to benefit workers, small businesses have expressed concerns. Business advocates argue that an increase in employer national insurance contributions could add to their operational costs, impacting their ability to manage payroll and employment levels. Tina McKenzie from the Federation of Small Businesses highlighted that while the minimum wage increase benefits workers, small businesses must also contend with added taxes on wages.
Next Steps and Expected Changes in UK Budget
The final minimum wage rate is set to be confirmed in the next UK Budget, with Rachel Reeves likely announcing this significant pay rise alongside other economic adjustments to support the UK’s workforce and economy.
The proposed 6% increase to the minimum wage reflects the government’s commitment to elevating earnings for the UK’s low-paid workers and could have far-reaching positive effects on communities and local economies across the nation.
