Since 2018, the cost of employing staff on minimum wage has risen dramatically, placing additional financial pressure on businesses. With the recent announcement of the 2025/26 minimum wage rates, employers are again facing increased payroll expenses. While many have voiced concerns about the rise from 2024/25 to 2025/26, a closer look at historical wage trends reveals some interesting insights.
The Cost of Apprentices Has More Than Doubled
One of the most striking changes is the cost of hiring an apprentice. In 2018/19, the apprentice minimum wage was £3.70 per hour. By 2025/26, it will have risen to £7.55 per hour—a staggering 104% increase over just seven years.
This means that employers hiring apprentices in 2025/26 will be paying more than double the hourly rate they did in 2018. While this increase aims to ensure fair pay for young workers, it may also deter some businesses from offering apprenticeship schemes due to the rising financial commitment.
How Have Other Wage Bands Changed?
The increases in national minimum wage rates across different age brackets also show significant growth:
- 25+ (now 21+) wage has risen from £7.83 in 2018/19 to £12.21 in 2025/26, a 56% increase.
- 18-20 wage has jumped from £5.90 to £10.00 in the same period—an almost 70% rise.
- Under 18 wage has increased from £4.20 to £7.55, a 79% jump.
How Does the Latest Increase Compare to Previous Years?
Many employers have been particularly vocal about the 2024/25 to 2025/26 increase, but interestingly, this year’s rise is not as drastic as some previous years. The increase from £11.44 to £12.21 (6.7%) for the top age band is notable but more gradual compared to previous jumps.
For instance:
- From 2022/23 to 2023/24, the minimum wage for the 21+ category rose from £9.50 to £10.42 (9.7%)—a steeper increase than the most recent one.
This data suggests that while the latest wage increase is still substantial, it follows a trend of smaller year-on-year increases compared to previous years.
The Bigger Picture: Overall Employer Costs
While the percentage increase in Employer National Insurance (NI) contributions is notable this year, the total cost of employment for businesses remains broadly in line with previous years—if not slightly lower. Although wages have risen, the overall increase in payroll expenses is following a steady trend rather than a sudden spike.
What Does This Mean for Employers?
The rising cost of employment means that businesses must carefully budget for payroll increases. For small businesses, in particular, these costs can be challenging, potentially affecting hiring decisions, pricing structures, and overall profitability.
With national minimum wage rates continuing to rise, businesses may need to explore ways to offset increased payroll expenses—whether through pricing adjustments, efficiency improvements, or government support schemes.
While higher wages benefit employees and contribute to improved living standards, businesses will need to adapt to these ongoing changes to maintain sustainability and growth.
For more information on national minimum wage, contact us on 01142 664 432 or email info@smh.group
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