The UK government’s latest plan to bump the minimum wage is causing some serious eyebrow acrobatics across the City and among law firms as Rachel Reeves, (pictured) ever keen to show she’s on the side of “working people,” is reportedly preparing to lift the National Living Wage to around £12.70 an hour, according to a report in the Financial Times.
Reeves is seriously considering a plan to raise the “National Living Wage”—the minimum wage for those aged 21 and over—by at least 4 percent, from the current £12.21 to £12.70 per hour, in the autumn budget to be announced later this month.
On paper, that sounds humane. In practice, it puts the minimum wage perilously close to what new graduates in law firms and finance firms actually earn.
Britain has now reached the rather surreal position where a newly minted lawyer at a small firm could be earning a wage only fractionally north of someone making flat whites in Soho. And that’s not a dig at baristas. It’s just that law school was supposed to mean something.
Recall the student loans, the exams, the debt, the aging student union carpet that smelled like despair. All for what? A £25k-ish starting salary that now sits just a polite shrug above the legal minimum.
If Reeves follows through, the minimum wage will have risen nearly 11% in a year. The official line is that pay should equal two-thirds of median national income. The unofficial reality is that work requiring professional qualifications is starting to look suspiciously like work that doesn’t.
Financial institutions are muttering darkly about “the death of the graduate wage premium” and the kind of “Why did I even bother getting a degree?” angst usually confined to philosophy departments.
In the legal sector, smaller firms fear that if junior lawyers can barely out-earn someone stacking shelves, interest in entering the profession will continue to erode.
Meanwhile, mid-sized firms are staring down the barrel of predictable corporate reactions:
- Cut trainee numbers
- Trim employee benefits
- Shave working hours
- Push responsibility upward and wages downward
And naturally, all this plays out during a period of soaring living costs, flattening real incomes and a widening gulf between the asset-rich and the rest. Median incomes rise, inequality balloons, and the government insists the solution is to narrow the gap from the bottom rather than lift the top.
A CEO quoted in the FT put it plainly – hiring junior staff is becoming “a high-risk business.”
