London, Apr 1: Over a million workers in the UK will get an increase in their pay from today, as the new mandatory National Living Wage was introduced by the government, requiring employers to pay workers aged 25 and over at least 7.20 pounds an hour.
The wage increase is expected to give 1.8 million workers an immediate pay rise. The policy was announced in last summer's Budget by Chancellor George Osborne, in an effort to create a higher-wage, lower-welfare economy.
The wage increase will result in 60,000 fewer jobs and increase business costs by around 1 per cent of corporate profits, according to the Office for Budget Responsibility.
"The National Living Wage will play a central role in moving Britain to a higher wage, lower tax, lower welfare economy," British finance minister George Osborne said yesterday.
"It will also mark the end of the gender pay gap for some of our lowest paid and hardest working people," he said. Workers aged 21 to 24 will continue to be paid the National Minimum Wage of 6.70 pounds an hour.
Some 1.3 million workers are paid the minimum wage, while another 500,000 who earn slightly more than the current 6.70 pounds an hour will also benefit.
Ryan Bourne, head of public policy at the Institute of Economic Affairs think-tank, said: "Its introduction will make it too expensive for some businesses to take on young, low-skilled workers in jobs that provide essential experience. It is these vulnerable people who will be hit the hardest".
"The implementation of the National Living Wage shifts both the purpose and means of wage setting. This is no longer about eliminating perceived exploitative pay, but about maintaining a more equal distribution in the bottom half of the labour market," he said.