Up to 1.3 million young people are set for a pay rise, with those on the minimum wage to receive the “biggest hike in hourly earnings for a decade”, according to the Low Pay Commission.

From 1 April next year, people aged 18 to 20 will get a 4.7 per cent boost while those aged 21 to 24 will get 5.4 per cent, the LPC said. It will come as welcome news as inflation has risen sharply since the Brexit vote, eating into the spending power of people’s pay packets. 

However, the new Government-mandated minimum rates are still significantly the level need to fund the basic costs of living, according to the independent Living Wage Foundation, which calculates a “Real Living Wage”.

The legal minimum will increase to £5.90 per hour for 18 to 20 year-olds and £7.38 for 21 to 24 year-olds, while the Real Living Wage is £8.75 per hour, or £10.20 per hour in London.

The LPC, which advises the Government on the minimum wage, said the new rates will directly boost the earnings of between 260,000 and 360,000 young workers, with many more benefiting because increases for those on the lowest rates of pay lead to “spillover” effects for those on higher wages.

Up to 7 million workers have experienced a pay rise as a result of the last increase to the minimum wage in April this year, the LPC said.

Despite the rises, the average British worker is currently experiencing falling real wages as price rises outpace inflation. The UK saw the biggest drop in real wages of anywhere in Europe apart from Greece in the years after the financial crisis. On current official forecasts, the UK is  set for the worst decade of pay growth since the early nineteenth century.

Commenting on the analysis, LPC chair Bryan Sanderson said: “The LPC is pleased that the Government has accepted our recommendations to increase the NMW rates for young people.  

“If economic conditions, particularly the labour market for younger workers, remain positive or improve then there will be grounds for further increases in NMW rates for younger workers in the future.”

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