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The new, compulsory national living wage comes into force today, putting an obligation on employers to pay workers aged 25 and over a minimum of £7.20 per hour.
It is thought that 4.5 million employees will benefit in 2016, rising to 6 million in 2020.
The new rate was the headline announcement in last summer’s Budget, and represents an almost 7% rise from the current national minimum wage of £6.70. Workers under age 25 (but 21 or over) will continue to be entitled to a minimum of £6.70 per hour.
The Government’s ambition is for the national living wage to rise to 60% of median hourly pay for over-25s by 2020, which is currently projected to be £9.
Businesses have spent the last year preparing their salary budgets and payroll to deal with the new rate, and a number of employers - such as Lidl and Ikea - increased their wage rates to £7.20 or higher before there has been a legal obligation to do so.
The Living Wage Foundation, which recommends a higher voluntary rate of £9.40 in London and £8.25 elsewhere, has also enjoyed a spike in employers signing up to pay its living wage rate.
David Cameron recently announced that the national minimum wage for 21- to 24-year-olds will increase by 3.7% to £6.95 per hour in October, after the Government accepted recommendations from the Low