How National Minimum Wage has changed since its introduction in 1999
The National Minimum Wage (NMW) was introduced in 1999 to prevent the lowest-paid workers from falling into poverty.
The figure increases each year to account for factors like inflation, economic fluctuations, and social change. In 2016, the National Living Wage (NLW) was introduced to help workers over 25 meet the cost of living – the previously highest band accounted for all workers over 21.
The NMW and NLW rates have increased over the past two years to support lower earners with the knock-on effects of the pandemic. The Chancellor, Rishi Sunak, recently announced that the NLW is increasing from £8.91 to £9.50 in April 2022 – an increase of 6.6%. This comes after the NLW age threshold was reduced from 25 to 22 in April 2021.
It’s a legal requirement for all businesses to comply with the up-to-date rates when payrolling employees. Trusted payroll software should account for the changes to prevent incorrect pay and therefore penalties.
On that note, let’s dive into the latest rates and historical data to see what’s changing – including a graph and table at the end of the article.
Changes to the National Minimum Wage
The below graph shows how the National Minimum Wage has changed since the millennium, including the introduction of the National Living Wage in 2016. Comparing the NMW rate of £3.60 in 1999 to the upcoming NLW of £9.50 in 2022, there’s an increase of 163.8%.
It’s interesting to consider the increase in costs of living during this 23-year period. In pop culture, the so-called “Freddo index” is a tongue-in-cheek way to measure inflation over the years – the popular chocolate bar that was once 10p is now 25p. Meanwhile, data from Halifax shows the average house price in 1999 was £91,199, compared to £265,668 in June 2021 – a 191.3% increase.
UK inflation rose to 4.2% in October 2021, the highest rate in over 10 years. An increase in NMW and NLW rates reflects the rising cost of living. Check out the table in Figure 2 for all the NMW and NLW rates from 1999 to 2022.
Figure 1: Graph showing the National Minimum Wage rate increase from 1999 to 2021
Figure 2: Table showing the National Minimum Wage rates by band from 1999 to 2022
|Date||Main Rate (Age 22+)||Youth Development Rate (Age 18-21)||Age 16-17|
|Main Rate (changed to Age 21+)||Youth Development Rate (changed to Age 18-20)||Age 16-17||Apprentice Rate introduced|
|25 and over||Age 21-24||Age 18-20||Under 18||Apprentice|
|23 and over||Age 21-22||Age 18-20||Under 18||Apprentice|