National Minimum Wage Changes in 2023

Minimum wage is the minimum amount of pay that an employer is legally required to provide to an employee for their work. The National Minimum Wage in the UK is set by the government and varies based on age and apprenticeship status.

In the UK, the minimum wage is divided into two key wage rates:

• The National Living Wage (NLW) for those aged 23 or over

• The National Minimum Wage (NMW) for those under 23 (or an apprentice)

The National Minimum Wage applies to anyone between the ages of 16-22 (or who is in their first year of an apprenticeship). We can understand it as the step before the National Living Wage. Most importantly, the National Minimum Wage is set by age.

The National Living Wage is a wage scheme in the UK designed to be higher than the minimum wage. It applies to all workers aged 23 and up (who are not in the first year of an apprenticeship). As such, it is fair to that the National Living Wage is essentially the minimum wage standard for the vast majority of UK workers.

From 1 April 2023, the NLW rate stands at £10.42 per hour.

The London Living Wage is a project, championed by the Mayor of London, for employers to voluntarily pay a higher standard of the National Living Wage for workers in the capital. The London Living Wage is currently £11.95 an hour.

There's a host of reasons to increase the minimum wage in the UK. The main reason is to assist workers in keeping up with the cost of goods, as per inflation, to help people essentially make ends meet. Increases, in line with inflation, are designed to help fight against poverty and help foster more economic security.

Estimates suggest that the total number of jobs paid, within five pence of the minimum wage, will rise to 2 million works as of 1 April 2023. This is an increase of around 400,000, suggesting that 1.6 million were paid the minimum wage in 2022.

As of 1 April, 2023, the UK minimum wage has increased. As of this moment, the National Living Wage will consist of an hourly rate of £10.42. Additionally, the rate for 21-22 year olds will be £10.18, for 18-20 year olds £7.49 and for 16-17 year olds it will be £5.28.

You can find the changes, alongside their percentage increases, below:

The minimum wage for UK workers in 2023 is increasing by approximately 9.7%, 10.8%, 9.6% and 9.7% (dependant on age). This is based primarily on advice from the Low Pay Commission (LPC). Overall, the increases are designed to help workers and families continuing to fight continued issues caused by the cost of living crisis.

Changes to the National Minimum Wage were made following recommendations by the Low Pay Commission (LPC). Their intent is to support both the wages and living standards of low-paid workers across the UK, and are designed to be in line with the general trends of the wider economy.

Current projections from the LPC suggest that the National Living Wage will need to increase somewhere between £10.90 and £11.43 to meet targets.

The central estimate is that the minimum wage in 2024 for the UK will be £11.16. This is, in fact, trending higher than initial projects which stood at £11.08.

This is primarily based on the UK Government's target for the minimum wage to hit two-thirds of median earnings by 2024. Studied implications suggest that a potential increases in 2024 would only have to be smaller to hit this target.

Due in part to emerging from the pandemic, many feared that a potential economic slowdown would need to be bolstered by increased wage growth. This led to a larger increase on the minimum wage in 2023, to help "push us" out of the pandemic faster.

In 2022, the UK minimum wage also saw increases across each relevant age range. That included increases for 16-17-year-olds (£4.81 with a 4.1% increase), 18-20-year-olds (£6.83 with a 4.1% increase) and 21-22-year-olds (£9.18 with a 9.8% increase).

The National Minimum and Living Wages are negotiated settlements based on recommendations from businesses and trade unions.

Set against the backdrop of the cost of living crisis, many UK workers wonder if the minimum or living wage is able to keep up with the cost of goods. In fact, since 2015 the minimum wage has trended higher than inflation.

Since April 2021, the real value of the National Living Wage has trended lower, month over month, due to the cost of living crisis. That said, since the increase as of 1 April 2023, we will hopefully see a reversal of this trend.

While it is impossible to predict the future, current estimates project a stabilisation in prices for the remainder of 2023 into 2024. This could lead to a re-levelling of the real value of the National Living Wage (and relief for many workers).

Both the National Living Wage and National Minimum Wage apply to all workers in the UK. It mainly varies based on age (and apprenticeship status). But, even part-time labourers, casual workers and anyone else providing work in the UK are entitled to receive a minimum wage of some amount.

The National Minimum Wage in the UK does not apply to those who are self-employed, working on a volunteer basis and family members who share a common residence as their employer and complete household chores.

The apprentice rate only applies to people under the age of 19, or who are over the age of 19 but are subsequently in the first year of an apprenticeship. The apprentice rate for 2022 was £4.81, and the rate for 2023 will be £5.28. If apprentices are both over the age of 19 and no longer in their first year, they are entitled to their relevant minimum wage.

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Introduced as a voluntary wage scheme in the UK, the Real Living Wage is paid by over 10,000 employers in the UK (including Nationwide, Google, Everton FC and Chelsea FC). It is currently £9.90 in the UK and £11.05 in London.

As of 22 September 2022, the Real Living Wage has seen a 10.1% increase (year-over-year) and now sits at £10.90 in the UK and £11.95 in London. This will extend to 390,000+ workers who are currently paid across 11,000 employers.

As of 1 April 2023, the following minimum and living wage rates apply in the UK:

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