The so-called ‘National Living Wage’ (NLW), previously known as the National Minimum Wage’, will increase by 6.2% on Wednesday 1 April to £8.72 for all working age adults aged 25 and over.
This follows a recommendation made by the Low Pay Commission (LPC) in October 2019, which was later accepted by the government as part of its ambition to reach a new target of two-thirds of median earnings by 2024.
The NLW is the statutory minimum wage for workers aged 25 and over. Different minimum wage rates apply to 21-24 year olds, 18-20 year olds, 16-17 year olds and apprentices aged under 19 or in the first year of an apprenticeship.
This age threshold is expected to be reduced from 25 to 23 in 2021, and then further to 21 by 2024, following a review into the structure of the NMW youth rates and recommendations made by the LPC.
Bryan Sanderson, Chair of the Low Pay Commission, said: Many of the nation’s key workers – in, for example, the care sector, agriculture, transport and retail – are low-paid, are continuing to work in very difficult conditions and will benefit from today’s increase.
“At the same time, the Government has introduced a comprehensive package of support for employers to lessen the impacts of these extraordinary circumstances.
“Under our new remit, the Government asks us to monitor the labour market and the impacts of the National Living Wage closely, advise on any emerging risks and – if the economic evidence warrants it – recommend that the government reviews its target or timeframe. This is what the Government refers to as the ‘emergency brake’.
“The ongoing Covid-19 pandemic clearly represents a very challenging set of circumstances for workers and employers alike, and will require us to review whether the emergency brake is required when we next provide our advice to the Government.
“This advice will be crucially dependent as always on the economic data we receive.”
However, the government admits that the NLW is “different from the UK (Real) Living Wage and the London Living Wage calculated by the Living Wage Foundation”.
Prior to today’s increase to the NLW, the Living Wage Foundation estimated the ‘Real Living Wage’ to be £10.75 an hour in London and £9.30 an hour across the rest of the UK. Both of which are considerably higher than the NLW, even before today’s increases.
The Foundation explains: “The Real Living Wage rates are higher because they are independently calculated based on what people need to get by.”
The Trade Union Congress (TUC) welcomed today’s NLW rise, but called on government and businesses to adopt the Real Living Wage “as soon as possible”.
TUC General Secretary Frances O’Grady said: “Britain is indebted to its army of minimum wage heroes.
“Many – including care workers and supermarket staff – are currently on the frontline of the battle against coronavirus. They deserve every penny of this increase, and more.
“The best way to show our respect is to get the minimum wage up to a Real Living Wage as soon as possible.
“Millions of low-paid workers are struggling to make ends meet. That’s not right during a pandemic – or at any time.”