Revealed: British minimum wage soars to the second highest in Europe as businesses sound alarm over impact on the UK job market
The National Living Wage - which is the minimum for anyone aged 21 and over - increased by 6.7 per cent to £12.21 an hour this April.
The move was the latest of a string of rises over recent years that has put the UK second only to Luxembourg for the generosity of its minimum wage.
There, workers would take home £2,183 before tax, compared to £1,888 in Ireland - which was third highest - followed by £1,815 in the Netherlands and £1,788 in Germany.
MailOnline has created a graphic that allows you to compare the average monthly minimum wage across Europe, using figures compiled by investing research platform BestBrokers.
The £1,984 gross figure for the UK would amount to roughly £1,722 after deducting income tax and national insurance.
Labour increase in the National Living Wage would be worth £1,400 a year for more than three million workers. Meanwhile, the rate paid to 18 to 20-year-olds rose to £10 an hour from £8.60 - a 16.3 per cent increase.
However, business chiefs say the large rises represent a double-whammy for struggling companies on the back of a rise to employers' national insurance contributions.
And they warn that the inflation-busting increases are making it more expensive than ever to hire staff and will force them to cut back on hiring.
Analysis from the Centre for Policy Studies the cost to a business of employing someone full-time in low-paid work will be £2,367 more expensive than it was in 2024 - when you combine wage hikes with rises to employers' natural insurance.
The CPS warned the soaring cost of employing minimum wage staff would have an 'obvious impact' on hiring decisions, with many firms scaling back plans to create jobs.
As a result, people in low-paid work as well as the unemployed seeking to re-enter the workforce would find their opportunities restricted.
'Labour claims to understand the importance of growth and to have made it a priority,' said CPS director Robert Colvile.
'The changes to employer's National Insurance and the increases in the minimum wage make it disproportionately more expensive to employ those at the lower end of the wage scale.'
Minimum wage rises have been hailed by low pay campaigners and unions for putting more money in the pockets of the lowest paid.
Latest figures show average hourly pay rose for all income groups in the year to April 2024, but the lowest paid saw the biggest increases.
Hikes to the minimum wage have also been credited with driving a substantial fall in wage inequality between the highest and lowest paid workers since 2016.
The IFS has estimated that the cost of hiring a full-time worker on the minimum wage in 2025–26 will be 7.1 per cent higher than in 2024–25 in real terms
But despite the boost to pay packets for the lowest paid, experts warned working age households overall are on track to be £400 worse off this tax year.
The Resolution Foundation said households were facing a 'triple hit' from the impacts of tax, higher bills, and benefits that are not keeping pace with the cost of living.
Long-running freezes to personal tax thresholds will mean some people are dragged into paying more tax.
Meanwhile, Labour's hike to employer national insurance will feed through to households through slower wage growth as employers recoup costs, the think tank said.
The hospitality industry has been hit particularly hard by the rise in costs, with pubs now closing at their fastest rate since last summer.
The number of pubs that declared insolvency jumped to 67 in April, the highest number since last July when 75 pubs went bust, according to accountancy firm Price Bailey.
It said insolvencies are starting to tick higher after a decline at the end of 2024, due to tax changes that took effect in April.
'The early signs are that the tax and minimum wage hikes which took effect in April are already tipping some struggling pubs over the edge,' said Matt Howard, head of the insolvency and recovery team at Price Bailey.
'It was widely believed that pub businesses would initially find ways to absorb the additional payroll costs and that the full impact would only be felt much later in the year.
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'And, as the biggest savings will be given to cars with the strongest 'green' manufacturing credentials, drivers will be picking models that are not only better for their wallets, but better for the planet too.' Delvin Lane, CEO of charger provider Instavolt, said the grant will be a 'major contributor' to boosting demand for EVs. Five of the best EVs likely eligible for the grant While any battery electric car with an RRP of £37,000 or below will be eligible for the grant, we will have to wait for manufacturers to apply for the grant before finding out which vehicles qualify - and which band and subsidy amount they will be categorised. However, here is a list of five of the best EVs on sale currently that are available for less than £37,000 - and should become cheaper to buy within a matter of weeks. Below, we have listed them with the potential start price if they are to qualify as band one EVs eligible for the full £3,750 grant allowance. 1. Renault 5 E-Tech - from £19,245 Current price from: £22,995 Versions under £37k: all Range: up to 250 miles The Renault 5 E-Tech is a reborn version of the legendary 1980 model with battery power - and it has proved a huge success for the French manufacturer since it arrived in Britain earlier this year. With impressive driving characteristics, a premium feel to the cabin and a more than adequate range of between 190 to 250 miles, it is the worthy reigning winner of the illustrious European Car of the Year Award. While a starting price of £23,000 and even the top-spec Roland Garros version ringing in at less than £30,000, every version should be eligible for the grant. The 5 has been the best-selling EV in the UK retail sector in the months of April and May, so this is certainly one of the cars the grant is aimed at. 2. Nissan Leaf - from circa £26,250 Current price from: circa £30,000 Versions under £37k: TBC Range: up to 375 miles An all-new Nissan Leaf is due to hit showrooms this year with a starting price of around £30,000 - well within the boundaries of the Electric Car Grant eligibility criteria An all-new Nissan Leaf is due to hit showrooms this year. And, given it's the only mass-market EV produced in the UK [since assembly of the Mini EV moved to China] at the Sunderland plant in the Northeast, the Japanese brand will be hoping to meet the requirements to secure the full £3,750 'band one' grant allowance. Unlike the outgoing Leaf hatchback, the new model is very much a crossover with a jacked-up ride height and bulkier styling. Prices are yet to be confirmed, but bosses have hinted it will start from around £30,000. Even mid-to-top spec models are likely to sit below the grant's £37,000 threshold. Two battery options will be available from launch in 2025: a smaller - and cheaper - 52kWh unit offering up to 270 miles of range on a single charge and a larger 75kWh battery which ups the distance to 375 miles. 3. Citroen e-C3 - from £18,345 Current price from: £22,095 Versions under £37k: all Range: up to 199 miles There are plenty of compact EV options that should qualify for the ECG criteria, including the Dacia Spring (from £14,995) and Hyundai Inster (from £23,505). But our pick of the most attainably priced electric cars is Citroen's new e-C3, which start from £22,095. With a range of up to 199 miles, an existing starting price a little over £22,000, and enough room for five adults, this practical and comfortable electric supermini could become even more affordable if it qualifies for the full ECG amount. Even the entry-spec models get a 10.25-inch infotainment screen with Apple CarPlay and Android Auto connectivity, while higher trim levels - all of them falling well below the grant's £37,000 ceiling - have heated seats, a heated steering wheel and a reversing camera. 4. Kia EV3 - from £29,255 Current price from: £33,005 Versions under £37k: EV3 Air Range: up to 375 miles The entry 'Air' specification of the new Kia EV3 sits under the £37,000 ECG threshold with the choice of either the 58.3kWh or 81.4kWh battery. For an electric family car, it could become a tempting option with up to £3,750 off Kia's latest - and smallest - model, the new EV3, looks set to steal a march on rivals in the most competitive segment of all. With every brand on the planet seemingly offering a compact SUV, Kia's EV3 is our choice of the bunch with exclusively battery power. The entry 'Air' specification sits under the £37,000 ECG threshold with the choice of either the 58.3kWh or 81.4kWh battery. While the smaller battery model (starting from £33,005) offers a range up to 254 miles, the £36,005 Air with the Long Range 81.4kWh battery providing up to 375 miles on a single charge. 5 Skoda Elroq - from £27,760 Current price from: £31,510 Versions under £37k: Elroq SE, SE-L and Edition Range: up to 266 miles Skoda's new Elroq is one of the standout electric family cars with a RRP low enough to qualify for the new Electric Car Grant For family car buyers, Skoda's Elroq is another quality option. And with three models in its range likely to qualify for the ECG, a discount of up to £3,750 could make it compelling option. It's roomy, well-equipped and has that robust Volkswagen Group build quality. While not the most entertaining to drive, its arguably excellent value against comparable rivals. The entry Elroq SE with a 52kWh battery is the cheapest from £31,510, though this provides a maximum range of up to only 233 miles. However, the SE-L 60 and Edition 60 with the bigger 59kWh offer up to 266 miles and both sit below the grant's £37,000 cut-off for eligibility. Unfortunately, the larger 77kWh battery versions are all over the ECG's price threshold.
