MercoPress. South Atlantic News Agency

UK National Living Wage up from £10.42 to £11.44 an hour; will apply to workers over 21

A full-time adult worker paid the minimum wage will see a pay rise worth £1,800 a year

The minimum wage set by the British government, known as the National Living Wage in UK is rising from £10.42 to £11.44 an hour and will apply to workers over 21 rather than over 23, benefiting some 2,7 million low paid workers. Younger workers will also see a rise in the rates that apply to them.

But some small businesses say the higher labor costs will make it harder for them to keep prices down, and to manage they might have to cut staff.

The changes mean: A full-time adult worker paid the minimum wage will see a pay rise worth £1,800 a year; A 21-year-old, who moves from the lower minimum wage rate to the main rate, will get a £2,300 rise.

Likewise the minimum wage for 18-20-year-olds will increase from £7.49 to £8.60 an hour. Apprentices will also get an above-inflation rise, with hourly pay going up by more than 20%, from £5.28 to £6.40 an hour.

When setting the minimum wage, the UK government is guided by proposals from the Low Pay Commission. The rising cost of living prompted the independent commission to recommend a bigger rise in the minimum wage.

The government accepted the recommendation, saying it meant the Conservatives' target to “end low pay”, by lifting the minimum wage to two-thirds of average earnings, had now been met.

Business and trade minister Kevin Hollinrake conceded that rising wages meant rising costs for firms. “We should never forget that private sector businesses shoulder the biggest burden in terms of paying the minimum wage,” he told the BBC.“But it is really good news for 2.7 million people.”

The Resolution Foundation, an independent think-tank, says the minimum wage increase represented a rise of 7.8% in real terms - once inflation was taken into account - and a 9.8% rise in cash terms.

It says pay inequality had fallen significantly since 1999 when the minimum wage was introduced, making it “the single most successful economic policy in a generation”.

According to the Bank of England, inflation in UK now stands at 3,4%, while the government's target is a 2% annual inflation. However the Bank of England believes inflation has not been definitively beaten and the current bank rate stands at 5,25%, with the next Monetary Policy Committee meeting scheduled for 9 May. In the last MPC in March a clear majority, 8 to 1 voted to keep the 5,25% unchanged.