The UK Still Lags Behind Even After the Minimum Wage Increases
Many Briton workers will find it difficult to accept the prospect of minimum wages not rising fast. According to research by money.co.uk, British minimum wage increases have been low compared to other countries—“missed out” on the top ten countries for rises.
What Are The Minimum Wage Rates Right Now?
There are various national minimum wage schemes in the UK, and they vary according to age and working status. The following are the prevailing rates as of April 2021:
- 23 and above-£8.91
- 21 to 22-£8.36
- 18 to 20-£6.56
- Under 18-£4.62
The rates are shaped by furlough and the pandemic. However, the latest data by the Office of National Statistics (ONS), millions of employees have been affected by the rates. ONS found, in November 2020, that 2,034,000 jobs with employees aged 16 years and over who were paid below the National Living Wage—7.2% of employee jobs—in April.
This matches 409,000 in 2019, but according to the ONS, no conclusions should be made about the percentage vary because new rates are introduced at the beginning of April. At this point, in 2020, a pay increase for the many furloughed workers was not practical.
How Will The Wage Rates Impact the Economy?
Hargreaves Lansdown, in September, conducted a study on how businesses are coping with vacancies. They found that 13% of companies find it harder than usual to fill the vacancies—from 9% in August.
One of the most common reasons (15%) was that the roles did not pay enough for applicants.
The organization further observed that some firms fail to appreciate that only pay isn’t enough to attract employees—this is common for professional, scientific, and technical jobs. Additionally, it’s something usual for businesses paying minimum wage for challenging jobs.
Will Employment Be Impacted? If Yes, How?
For 18 months or so, many workers have been forced on furlough as firms coped with the coronavirus effect. The layoff is scheduled to end on September 30. But experts warn that as employers face unforeseen rising wage demands, they’ll have to let go of staff to keep their business operating.
The Bank of England last week passed to maintain the base rate at 0.1%. The bank’s Governor, Andrew Bailey, addressed the impact of the furlough scheme to the Chancellor of the Exchequer Rishi Sunak—through a letter.
The letter indicated that the unemployment rate in the Labour Force Survey fell to 4.6 per cent in the three months to July, which was slightly lower than the expectations in the August Report. The number of full and part-time furloughed jobs has continued to fall, but to a much lesser extent than estimated in the August Report, based on the most recent reported figure of 1.7 million in July.
What Should You Do to Prepare for This?
With uncertainty building up as the furlough scheme winds up, employees are advised to prepare for the hard times ahead. Money.co.uk noted if employees are still getting any furlough payments, they’ll stop from next week.
That said, money.co.uk suggested that workers on the furlough scheme should scrutinize their finances to figure out how the scheme ending will affect them.
Additionally, it’s essential to keep in mind that while returning to your day job will earn you more money, it will also cost you more money for your commute, lunches, and other work expenses. If you believe you will reduce your income, now is the time to reorganize your finances and budget wisely to ensure you are in the best possible position for the month ahead.
Denzil is an experienced writer and a procurement graduate on a mission to eliminate poor regurgitated content while advocating for top-notch digital content. When he’s not writing, Denzil joins the rest of the world watching the English Premier League games.