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Pay rise for 2.3 million as minimum wage rates go up 'will pressurise employers'

Around 2.3 million workers will receive a pay rise when minimum wage rates increase on Saturday, but they will create pressures for employers, a report finds.

A study by the Low Pay Commission revealed that in some areas of the UK, more than a fifth of workers will have a wage increase, while in others, just 1% will benefit.

The Government's National Living Wage, paid to people over 24, goes up by 30p an hour to £7.50.

The national minimum wage will increase by 10p to £7.05 for those aged 21 to 24, by 5p to £5.60 for those aged 18 to 20 and by 5p to £4.05 for those aged 16 and 17.

The commission, which advises the Government on the minimum wage, said the higher Living Wage will increase the pay of a typical full-time worker on the rate, by £600 a year.

Accounting for inflation, the minimum wage will be at its highest ever value, said the commission, which advises the Government on the figure.

Around 22% of workers in West Somerset will benefit from increases to the Living Wage, 21% in Torridge, Devon, and almost one in five in other areas including Rossendale, Lincoln, Redcar and East Renfrewshire, the study found.

In contrast, only 1% of workers in the City of London will benefit, and 2% in areas including Oxford, Guildford and South Cambridgeshire.

Commission chairman Bryan Sanderson said: "The minimum wage increases will bring another year of substantial pay rises for the lowest-paid.

"The minimum wage will cover more workers than ever, and ripple effects mean that the benefits could affect people earning above the minimum as well.

"Thanks to the minimum wage, hourly pay for the lowest-paid is at its highest ever level, unlike pay for other workers which remains well below its pre-recession peak.

"Accompanying pay increases, there will inevitably be pressure for employers.

"While the labour market is performing strongly overall, there has been some weakening in employment growth across some low-paying occupations since 2015, though others are still seeing employment grow.

"These are turbulent times and we will continue to monitor the situation closely."

Conor D'Arcy, of the Resolution Foundation, said: "Big increases in the National Living Wage during this parliament are a bold and welcome intervention at a time when pay packets across the rest of the economy are set to be squeezed."

A Government spokesman said: "This rate rise is good news for some of the UK's lowest paid workers.

"These increases were announced in November last year as part of the Chancellor's Autumn Statement, giving employers six months to prepare, and both rises were recommended by the Low Pay Commission to take the interests of both workers and businesses into account."

Shadow Chancellor John McDonnell said: "The Tories have attempted to disguise the truth on their so-called National Living Wage.

"The National Living Wage isn't a real living wage at all, and the £9 an hour promised by 2020 has been cut to just £8.75.

"The decision by the Chancellor not to deliver on the Tories' promise of £9 an hour by 2020 will cost over two million workers more than £1,400."

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