The minimum wage will rise from £8.91 to £9.50 per hour next year, the Treasury announced on Monday.
The hike "means a full-time worker on the National Living Wage will see a pay rise of more than 1,000 pounds a year," said a Treasury statement.
The minimum wage increase, which applies to workers aged 23 and above, is matched by other increases for younger workers.
"This wage boost ensures we're making work pay and keeps us on track to meet our target to end low pay by the end of this parliament," Chancellor Rishi Sunak was quoted as saying in the statement.
The wage hike, set to be announced in the autumn Budget on Wednesday, follows the announcement by the government of a 500-milion-pound fund to help low income Britons during the winter months with food and utility costs that have shot higher.
Commenting, the Federation of Independent Retailers (NFRN) said the planned minimum wage increase will be a “bitter blow” to small businesses that are already struggling to survive.
NFRN added that independent retailers will bear the brunt unless they receive help from the government.
“Rather than boosting many shop workers’ incomes, the proposed increase will have the opposite effect of threatening jobs in the sector,” Narinder Randhawa, NFRN national president, said.
“We would all like to pay our staff more, but the headline increase in the wage rate does not include the increase in National Insurance and pension contributions that employers also have to pay.
“Given that many of the items on sale in our 11,000 members’ stores – particularly newspapers and magazines – are price marked, retailers are unable to increase their prices to cover these additional payrolls costs.”
The Federation of Small Businesses (FSB) has warned that small firms need additional support amid rising costs across the board.
“The Treasury must play its part to secure wage increases – the taxman will gain almost £500 for every worker whose pay increases to £9.50 an hour,” Mike Cherry, FSB national chair, noted. “Larger than expected increases in the Living Wage must be matched by support for those who will struggle to afford to maintain jobs – these are the smallest employers, up and down the country, who need to see the extension of the small business Employment Allowance, which covers the first £4,000 of Employer NICs.
“Without an increase in the EA, the combination in April of higher wage bills and higher tax bills will see many more than the forecast of 50,000 people added to unemployment queues. After pre-briefed announcements to help the banks with their tax bills, and to help international companies to invest here, there needs to be a clear offer from this Government to small businesses, too.”
