Sector faces challenge of sharp rise to the national living wage

The Government has pledged to raise the national living wage by 6.2 per cent in what it says is ‘the biggest cash increase ever’.

In April the national living wage, for people over 25, will rise to £8.72, representing an increase which is more than four times the current rate of inflation.

Meanwhile, the minimum wage for under-25s will rise by 6.5 per cent, taking it to £8.20.

While the increase is good news for many nursery workers, cash-strapped providers are warning that a sharp increase in wages will put pressure on them to find other ways to cut costs.

Specialist research company Ceeda says this represents ‘yet another real-terms cut’ set against the childcare funding rise of rise of  1.8 per cent.  It is urging early years providers to attend its #TheBigEYdebate on 23 January, when the sector will come together for advice, support and to look for solutions to the funding crisis. 

Piling on the pressure
Hannah Essex, co-executive director of the British Chambers of Commerce, said that many companies ‘have struggled with increased costs in a time of great economic uncertainty’.

‘Raising wage floors so far above the rate of inflation will pile further pressure on cash flow and eat into training and investment budgets,’ she said.

‘For this policy to be sustainable, government must offset these costs by reducing others.’

From April 2020, the new rates are:

  • The National Living Wage for ages 25 and above – up 6.2 per cent to £8.72
  • The National Minimum Wage for 21 to 24-year-olds – up 6.5 per cent to £8.20
  • For 18 to 20-year-olds - up 4.9 per cent to £6.45
  • For under-18s - up 4.6 per cent to £4.55
  • For apprentices - up 6.4 per cent to £4.15


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