If only the minimum wage rise were an April Fool's. The impact of this is no laughing matter - Liz Barclay

Liz Barclay
Wed, 01 Apr 2026 14:37:42 +0000
Membership

The national minimum wage will increase from today (1 April). 2.7m workers will have more money in their pockets. The hope is they’ll have more money to spend, and so some of the wage increase will go back into the coffers of small businesses.

However, anything additional that the businesses get from their customers is more likely to end up paying increased costs of doing business or going to the tax department.

The April 26 increases are on top of a 6.7 per cent rise for over 21s and a 16.3 per cent rise for 18 to 20 year olds, respectively in 2024.

That was accompanied by an increase in the rate of employers’ National Insurance contributions (NICs). The national minimum wage and national living wage will increase again from today across all age bands.

Workers aged 21 and over will be entitled to a minimum hourly rate of £12.71, up from £12.21, a 4.1 per cent hike. The annual gross earnings for a full-time worker on the rate will rise by £900.

Younger workers will see larger percentage increases as part of an ongoing plan to ultimately phase out the rate for 18-20 year olds and align them with the adult rate.

This means 18-21-year-olds will get an 8.5 per cent increase to £10.85 per hour. Apprentices and 16- to 17-year-olds will get a six per cent increase, rising from £7.55 to £8.

Statutory sick pay (SSP) will be £123.2 per week, up from £118.7. Statutory maternity, paternity, adoption and parental bereavement leave will also rise from £187.1 per week to £194.3.

The lower earnings limit will jump £4 per week from £125 to £129, with forthcoming legislation expected to extend SSP entitlement to employees earning below the lower earnings limit.

I’ve yet to come across an employer who doesn’t want to pay well, fairly and more, if possible, for good workers. Workers will welcome today’s rises. They need the increases to cover the rapidly increasing cost of living.

The big question here is whether business owners and employers will cope or have to make people redundant. Many have already found themselves unable to make their businesses pay because of the latest hikes in NICs.

When pay goes up, so too do NICs and pension contributions. Rising business costs will make the situation worse this time around.

Increasing costs also run the risk of putting a freeze on hiring, lower pay rises for those not on the minimum wage, cutting pension contributions or raising prices for customers, with a resulting loss of customers.

The Resolution Foundation has previously argued that the minimum wage increase for 18 to 20-year-olds is “unnecessarily big” and could ultimately make it harder for people that age to find a job, with employers likely to opt for older, more experienced people.

They say we could be seeing “more harm than good”, and it could increase the number not in employment, education or training (NEETs).

The Office for National Statistics calculates that 957,000 16 to 24-year-olds are NEET already, which is about an 8th of that age group.

Young people are particularly hard hit by cuts in hospitality and retail, a reduction in graduate schemes and the use of AI in entry-level roles.

Businesses must make sure that pay for all workers and apprentices meets or exceeds the new statutory minimums from today (1 April).

Many may choose to reduce costs by cutting roles or reducing hours. Many businesses are considering boosting automation where possible or cutting spending.

Some employers are reconsidering their long-term plans in a bid to make it through another year.

What's good for the goose isn’t always good for the gander, and this could be a case of killing off the very businesses that have been providing the jobs in the first place. No: this isn’t an April Fool's.