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National minimum wage rises to £6.70

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The national minimum wage rate is now £6.70 for workers aged 21 and over

The national minimum wage has risen from £6.50 to £6.70 per hour for workers aged 21 and over.

The increase comes into effect on 1 October, with the national living wage due to be implemented in April 2016.

The national minimum wage rates are now £6.70 for workers 21 and over, £5.30 for those aged 18 to 20, £3.87 for 16- to 17-year-olds above school leaving age, and £3.30 for apprentices under 19 or 19 and over who are in the first year of an apprenticeship.

The compulsory national living wage will further increase the minimum pay for those aged over 25 to £7.20 per hour. It is different to the living wage – a rate set independently by the Living Wage Foundation and calculated according to the basic cost of living in the UK – which is currently £7.85 per hour across the UK and £9.15 in London. New rates will be announced in November.

Some organisations have already pledged to pay the Living Wage Foundation’s recommended rate or higher. Supermarket chain Morrisons has announced it will pay staff a minimum of £8.20 per hour from March, and Lidl, Oliver Bonas, British Gas, Nationwide and others have committed to matching the Foundation’s rate.

Rhys Moore, director of the Living Wage Foundation, said he was “delighted” that Morrisons will be paying wages that go beyond the legal minimums. “Its commitment to paying a living wage to its staff is a huge move in the retail sector, showing others that they, along with retailers such as Lidl, Ikea and Oliver Bonas, can make better pay a reality on the British high street,” he said.

Andrew Chamberlain, chief economist at job review website Glassdoor, warned that minimum wage rises can have harmful effects. “The Office for Budget Responsibility recently estimated that increasing the national living wage could lead to 60,000 job losses, and lower GDP by 0.1% by 2020,” he said. “The larger plan to implement a national living wage of £9 per hour by 2020 could also have a material impact on retailers, likely resulting in price rises and fewer low-skilled jobs across the UK."

“Most studies find that minimum wages kept below 50% of the median UK wage are harmless and mostly benefit workers,” he continued. “However, by 2020 the £9 minimum wage is expected to be 60% of the median UK wage. Labour economists will be watching closely for signs of unintended effects on the economy in coming years.”