British workers now enjoy the second highest minimum wage in Europe, receiving an average of £1,984 a month before tax.
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.
Luxembourg has the highest minimum wage in Europe, with workers receiving £2,183 before tax
These figures show the lowest minimum wages in Europe
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
Labour ministers spent £35,580 – which is more than a nurse or teacher’s starting salary – to pay for beer mats promoting the rise in the minimum wage
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.
Rachel Reeves (seen today) hiked the National Living Wage – which is the minimum for anyone aged 21 and over – by 6.7 per cent to £12.21 an hour
‘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.
‘That the impact has been so immediate shows that many pubs had already exhausted their financial buffers.’
