A rise in the UK “national living wage” is expected to be announced by the government early this week, potentially raising it by more than 5% to £9.42.
Ministers are set to accept the recommendations of the Low Pay Commission, which has been examining the possibility of an increase from £8.91 to approximately £9.42 in April 2022.
The £9.42 figure is the current central projection for next April’s rate, with a likely range of 7p above or below this amount.
The other national minimum wage rates – for 21- to 22-year-olds, 18- to 20-year-olds, 16- to 17-year-olds and the apprentice rate – are also likely to rise.
Ministers will be hoping the increase will go some way towards compensating the low-paid who are losing out from the £1,000 a year cut in universal credit, and the effect of inflation on household budgets.
The commission, an independent body that sets the rate, submitted its recommendations to the government last week, and ministers are likely to make an announcement imminently.
In the budget on Wednesday, the chancellor, Rishi Sunak, is likely to confirm the government is targeting a rise in the national living wage to more than £10 by the time of the next election.
With inflation running high, he is also set to say that the “pause” on public sector pay that affected 2.6 million teachers, police and civil servants will be lifted in April.
The chancellor imposed the freeze last November and it came into force in April. At the time, he said it was unfair for public sector workers to get a rise while many of their private sector counterparts were being furloughed or losing their jobs.
But with wages in many sectors rising, and the prime minister using his party conference speech to highlight the prospects for a “high-wage economy”, that argument no longer applies.
However, each Whitehall department will have to fund any pay increases from within its own budget, and analysis by the Trades Union Congress shows the pay of many public sector workers has fallen significantly in real terms after years of tight settlements.