Report

Minimum wage, maximum pressure?

This report from UK think tank the Resolution Foundation looks at the impact of 2025’s minimum wage and employer NICs increases.

The coming week will be an expensive one for the employers of low-paid workers. On April 1st, the adult minimum wage will rise by 6.7 per cent – the seventh-largest rise in 26 years.

Rates for younger workers will rise even faster – by 18 per cent for 16-17-year-olds and 16.3 per cent for 18-20-year-olds, as the Government pursues its policy of convergence with adult rates.

Five days later, employer National Insurance Contributions (NICs) will rise substantially – and fastest on low-paid jobs. The big cut in the earnings threshold above which employers pay NICs – from £9,100 to £5,000 on annual earnings – hits lower-paid workers hardest, outweighing the top-heavy impact of the increase in the rate – from 13.8 to 15 per cent.

For a part-time minimum-wage worker on annual earnings of £10,000, for example, employers’ NICs will rise from £124 to £750, giving an increase in labour costs of 6.2 per cent. For higher earners, the increase in NICs is bigger in absolute terms, but smaller in proportion to earnings – just 2.0 per cent.