Millions of full-time workers across the United Kingdom are set for a significant financial uplift next year, with an average annual gain of around £975 expected for those aged 21 and over.
New National Living Wage Rates Announced
The government has confirmed a substantial rise in the minimum wage, set to take effect from April 2026. The key change sees the hourly rate for workers aged 21 and over increase by 50 pence to £12.71.
Younger workers will also see notable boosts. Those aged 18 to 20 will receive an 85 pence rise, taking their hourly pay to £10.85. For under-18s and apprentices, the rate will increase by 45 pence to £8 per hour.
This follows significant increases the previous year, which included a 6.7% rise for over-21s and a 16.3% rise for 18-20 year olds.
Mixed Reactions from Business and Unions
The announcement has sparked a broad spectrum of responses from industry bodies, unions, and think tanks. The Treasury stated the new rates for 2026 aimed to balance "the needs of workers, the affordability for businesses and the opportunities for employment".
Support came from the Trades Union Congress (TUC). General Secretary Paul Nowak said phasing out the separate youth rate was "absolutely the right call" and that the above-inflation pay rise would aid the lowest-paid with high living costs.
However, critical voices highlighted potential downsides. The Resolution Foundation think tank warned the large rise for 18-20 year olds was "unnecessarily big" and could hinder job prospects for that age group.
Business Concerns and the Living Wage Shortfall
Industry representatives expressed deep concern about the cumulative impact on businesses. Kate Nicholls, Chair of UK Hospitality, urged the Chancellor to reduce the sector's tax burden, warning that endless cost absorption has limits and would fuel consumer price inflation.
Jane Gratton of the British Chambers of Commerce echoed this, stating every above-inflation wage increase pressures business costs and investment.
Furthermore, Katherine Chapman, Director of the Living Wage Foundation, pointed out that even with this rise, the government-mandated rate still falls short of the voluntary Real Living Wage, which is currently £13.45 across the UK and £14.80 in London.
The Low Pay Commission, which recommended the increases, noted its view that previous rises for over-21s had not significantly harmed employment levels.
