Low-paid workers will have little to celebrate today (April 1) as a minimum wage rise of 19p an hour is rendered meaningless by rising living costs such as increases in council tax, and energy and internet bills.
For 2m workers, the minimum wage – rebranded by the government five years ago as the ‘national living wage’ despite not being linked to the cost of living – rises today from £8.72 to £8.91 an hour. For the first time, 23- and 24-year olds will be included in this higher minimum wage rate previously only granted to those 25 and over.
While 23- and 24-year-old minimum wage workers are set to be the biggest beneficiaries of today’s wage hike – with their rate rising from £8.20 to £8.91 – this will be cold comfort as inflation-busting households bill increases hit at the very same time, meaning most of these workers will be worse off.
From April, council tax rises come into force, increasing by about an average of 4.3 per cent across England. Meanwhile, for half of all households, electricity and gas prices are expected to rise by more than 9 per cent. There will be a £1.50 increase in the TV licence fee, while charges for prescriptions in England will also rise – by 20p to £9.35. Water bills are expected to decrease by an average of £2 to £408 a year, but some companies such as Thames Water have increased bills by £14 a year.
The Guardian reports that most mobile phone, TV and broadband suppliers will be increasing their prices as well.
An analysis by the Living Wage Foundation, which bases its real Living Wage – to which employers voluntary sign up and is linked the actual cost of living — found just how far behind minimum wage workers have fallen compared to workers who receive the real Living Wage.
The Foundation estimates that minimum wage workers have lost out on an astounding £10bn since 2016 compared to their real Living Wage peers, who now earn £9.50 outside of London and £10.85 in the capital.
This means that a full-time worker on the government’s minimum wage has lost out on £8,400 over the last five years, while a minimum wage worker has lost out on £21,800 over the same time period in London, where the cost of living is substantially higher.
This year, full-time workers in receipt of the real Living Wage will be £1,150 better off than workers on the minimum wage, while those in London will be £3,800 better off at the end of the year.
While Living Wage director Laura Gardiner welcomed the fact that the government was still committed to increasing the minimum wage, she added that such rises fall short of the real cost of living.
“There is still a substantial gap between this wage rate and one based on the cost of living, with national living wage workers falling billions of pounds short of a Real Living Wage over the past five years,” she said. “The result has been millions of workers and families struggling to keep their heads above water.”
Over the course of the pandemic, there has been a renewed public desire to see key workers — whose work has been instrumental in keeping the country going in a time of crisis – be properly rewarded.
But a new analysis by the TUC found that a shocking one in three essential workers earns less than £10 an hour. The vast majority – 75 per cent — of retail workers, which includes supermarket cashiers and shelf-stackers, earn less than £10 an hour, while more than 3 in 5 care workers – 62 per cent – earn the same. Meanwhile, nearly 70 per cent of teachings assistants also earn less than £10 an hour.
Commenting, TUC general secretary Frances O’Grady said, “Our shop assistants, carers and school support staff have worked around the clock to keep the country going through the pandemic – often at great personal risk to their health.
“But those expecting a decent pay increase tomorrow have been let down by the government’s decision to row back on the full rise they were promised,” she added. “Ministers must get the minimum wage up to £10 an hour to stop millions of working people from living in poverty.”
Unite general secretary Len McCluskey agreed.
He said that while the union would always support any increase in the minimum wage, he added this “rate is still not a real living wage”.
“Over the last year, the country has realised the true worth of our low waged workers while they clean, care and deliver for the nation during the crisis,” he noted. “These workers surely deserve a wage that reflects their huge contribution to our country, one that lifts them off the breadline and truly is an income that can be lived on decently.”
McCluskey has also called on the government to urgently fix the furlough scheme so that no one earns less than the minimum wage. Currently, the government covers 80 per cent of the wages of furloughed workers – meaning some low-paid workers are being forced to get by on less than the statutory minimum wage, which hasn’t even been increased for those on furlough in line with the uplift for others.
“It is unacceptable that there are hundreds of thousands of the lowest paid receiving only 80 per cent of the minimum wage,” he said. “Throughout this crisis we’ve called on the chancellor to fix this glaring hole in the furlough scheme and we continue to do so. No one should be expected to try to get by on less than the legal minimum wage rate, which, as we’ve seen, is already too low to live on as it is.”
By Hajera Blagg