By Samantha Jones –
The National Living Wage is to increase on Friday 1 April by 6.6 % to £9.50, providing a pay rise to millions of workers across the UK. There will be a real terms pay increase for 21-22 year olds who will see their pay increase by 9.8 per cent to £9.18 per hour.
These increases follow recommendations made to the Government by the Low Pay Commission in the autumn. The increase means a significant step forward towards reaching the target set by the Government for the NLW to reach two-thirds of median earnings by 2024.
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The Government published its remit to the LPC for 2022 in March. This asks the Low Pay Commission (LPC) “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.
The emergency brake is expected to ensure that the lowest-paid workers continue to see pay rises without significant risks to their employment prospects.” The LPC will make its recommendations to Government on the 2023 National Minimum Wage rates in October.
It comes as inflation continues to eat away at our finances, with the cost of everyday goods up 6.2% year-on-year.
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Chancellor Rishi Sunak also said the National Living Wage for over-23s would increase to £9.50. The apprentice rate will also rise, up from £4.81 an hour to £4.30.
But Tory ministers have previously claimed they would raise the minimum wage to £10.50 an hour and expand the eligibility to over-21s by 2024.
That is because ministers pledged future rises would be pegged to two-thirds of median earnings, higher than the previous 60% target.
Bryan Sanderson,(pictured) Chair of the Low Pay Commission, said:
‘Minimum wage workers across the United Kingdom continue to play a vital role in ensuring a strong post-pandemic economic recovery. In previous years the LPC has sought to keep increases to the minimum wage above inflation. However, inflation is now expected to be higher than the forecasts we had when we made our recommendations last October.
Workers on the minimum wage; care for our elderly and sick, harvest and deliver our food, and do a multitude of other tasks which help us all. Many public sector workers including for example teaching assistants will also shortly be included. They all deserve to be properly remunerated and respected as key members of our society.
Therefore, while today’s NLW increase of 6.6 per cent gets us back on track to reach the 2024 target of two-thirds of median earnings, it will unfortunately likely be a real terms cut. Though, 21-22 year olds will receive a real terms increase with a rise of 9.8 per cent. We will soon make this group eligible for the NLW and judged it sensible to close the gap between the rates over a longer period, rather than a very large increase once they become eligible.
The Low Pay Commission met with around a hundred representative bodies last year before making its recommendations. We are frequently their main sometimes even their only advocates. With government support we will continue to try to ensure that they do not suffer from the neglect which was so often characteristic of the past.
The LPC has today published a short report which looks ahead at what the new rates will mean, and the path of the NLW to its target of two-thirds of median hourly earnings by 2024. Estimating the forward path of the NLW is very challenging as earnings growth is difficult to measure and predict in the current economic climate. Nevertheless, our estimate of the on-course rate of the NLW for 2023 is £10.32 (an 8.6% increase) and £10.95 in 2024 (a 6.1% increase). Because of the uncertainty we will update our estimates in the summer
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