A New Deal for young workers?

New TUC analysis for our 2024 Young Workers Conference shows that more than 700,000 workers aged 18-20 across the UK are set to be left out of pocket as they are paid a lower rate of the minimum wage (writes TUC’s ALICE ARKWRIGHT).

On 1 April, the National Living Wage will go up to £11.44 per hour and be extended to workers aged 21 and over. But workers under 21 will still be paid less for the same work, simply because of their age and as many as seven in ten workers aged 18-20 could lose out. 

Over 700,000 18-20 year olds are paid less than this rate and they miss out on a huge £2,438 per year, or £47 per week, at a time when the cost of living is still sky high. This is completely unfair.  

Young workers have been let down time and time again by this Tory government.  

They have entered the labour market at a time when insecure work has exploded. Insecure work is characterised by low pay, less training and development, uncertainty in hours and fewer employment rights.    

16-24 year olds are over five times more likely to be on a zero hours contract than workers aged 25 and over.  

Despite only making up 11 per cent of the total workforce, young workers make up 40 per cent of the 1.18 million workers employed on a zero hours contract. 

And young women and young BME workers are more likely to be on them. 

Some young workers are not even being paid – a quick search of recruitment sites finds multiple internship adverts with no mention of pay, including one asking for 3 years’ experience.  

And three quarters of employees aged 16-24 miss out on key employment rights that most of us take for granted, such as protection from unfair dismissal and the right to statutory redundancy pay.   

Imagine working hard in a job for nearly two years – only to be let go with no recourse.   

Young people are always hit hardest during times of uncertainty, which they’ve faced time and time again in the last 14 years. Youth unemployment rose dramatically after the financial crisis and more recently during the pandemic. And we are seeing it rise again. The unemployment rate is highest for young BME and young disabled workers. 

A lack of decent work, training opportunities including good quality apprenticeships and careers services are keeping unemployment rates higher than they need to be and increases the risk of longer-term unemployment, which has significant scarring effects on young people’s future living standards and wellbeing. 

Since 2016/17 there has been a 37 per cent fall in the number of under 19s starting an apprenticeship. Many young people are put off them by the high incidence of low pay, low quality training and poor employment conditions. 

Every day we hear stories about sexual harassment in our workplaces. 2 in 3 young women have experienced harassment at work and they are particularly at risk of harassment from third parties such as clients, customers and patients.  

Last year, ministers promised to bring in a new law to put the onus on employers to keep their staff safe from this type of abuse. 

But instead, they buckled to Tory backbenchers, massively watered down the legislation and let down young women across the country. 

Alongside this failure to protect workers, this government have also introduced new anti-strike laws which mean a generation of young people could lose their right to strike.  

We must give young people a good start at working life. 

Labour’s New Deal for Working People stands in stark contrast to the Conservatives’ dire record on workers’ rights. It would: 

  • Ban zero-hours contracts to help end the scourge of insecure work.  
  • Ensure all workers get reasonable notice of any change in shifts or working time  
  • Give all workers day one rights on the job, scrapping qualifying time for basic rights, such as unfair dismissal, sick pay, and parental leave for all workers.  
  • Remove the discriminatory age bands from the minimum wage to ensure every adult worker benefits from fair pay.  
  • Ban unpaid internships; and  
  • Require employers to ensure workplaces are free from harassment, including by third parties. 

And Labour have committed to reform the National Careers Service and the failed Apprenticeships Levy into a ‘Growth and Skills Levy’ that works across all nations and regions. 

At Young Workers Conference, members from across our movement will debate what a better future for young people looks like and the need for this transformative New Deal. 

Festive bonus as UK Government progresses on workers’ rights package

Government sets out the next stages for a number of new Workers’ Rights Acts to support UK workers

  • UK Government sets out next steps to improve the lives of workers across the UK
  • Benefits include tips worth £200 million a year in the pockets of hardworking people and more say over working patterns
  • Government ‘also backing British workers’ by introducing the biggest ever increase to the National Living Wage

Millions are set to benefit as the Westminster government sets out the next stages for a number of new Workers’ Rights Acts – giving more money and more say back to UK workers.

Benefits range from £200 million more back in the pockets of hard-working people, to greater flexibility over when, where and how you work.

Business and Trade Minister Kevin Hollinrake said: “As we approach Christmas, it’s more vital than ever that we do what we can to support workers and families across the country.

“I’d like to encourage businesses to be as flexible as possible and give their hard-working employees the tips they deserve.

“I want to thank the MPs who brought forward this legislation to support hard working families and shape the UK’s outstanding workers’ rights record.”

The Employment (Allocation of Tips) Act 2023, which became law in May this year, requires employers to pass all tips on to workers.

Most employers already pass on tips to the staff who earn them. However, there are still some unacceptable tipping practices by unscrupulous employers, which must be stopped.

Christmas is an incredibly busy season for hospitality workers, and usually a time of year when customers are more generous with their tips. All employees deserve to receive their fair share of tips, so the Government has launched a public consultation on the Tipping Act’s Code of Practice to gain feedback from employers, workers and other stakeholders on the fair and transparent distribution of tips.

Acas Chief Executive Susan Clews said: “The shift in recent years towards increased use of flexible working by organisations has allowed more people to better balance their working lives and enabled employers to attract and retain skilled staff.

“Acas has recently consulted on a new draft Code of Practice which outlines good practice around requests for flexible working and explains the forthcoming changes in the law to employers and employees.”

New rights to protect new parents from redundancy, give carers extra support and help all employees work flexibly are also a step closer as government has laid legislation with plans for the measures to come in next spring.

These measures will improve the lives of hard-working families across Britain, aiding workers who have caring responsibilities or parents at risk of redundancy and ensuring everyone is able work as flexibly as needed into the new year.

An extra 2.6 million workers across the UK will benefit from the removal of the 26 week qualifying period that is currently required before making a flexible working request.

Those with caring responsibilities will also be entitled to a brand new employment right to a week’s leave to care for a dependent.

Redundancy protections are also being extended to cover pregnancy, as well as to new parents.

The UK Government is are also backing British workers by introducing the biggest ever increase to the National Living Wage, worth over £1,800 a year for a full-time worker, fulfilling the pledge to end low pay.

When this increase comes into effect in April, the National Living Wage will be worth nearly £21,000 a year for a full time worker – almost double, in cash terms, the amount which a full time worker on the National Minimum Wage earned in 2010.

For the first time, 21 years olds will be legally entitled to the National Living Wage, which is set to reach two-thirds of average earnings.

Record wage boost for nearly 3 million workers from next April

  • Biggest ever increase to the National Living Wage, worth over £1,800 a year for a full-time worker, fulfils manifesto pledge to end low pay.
  • Since 2010 the National Living Wage will have doubled in cash terms from around £10,500 to nearly £21,000 a year for a full-time worker.
  • For the first time, 21-year-olds on the National Living Wage will always earn two-thirds of average earnings.

The Chancellor will deliver a pay rise of more than £1,800 a year for a full-time worker, as he confirms that the National Living Wage will increase by over a pound an hour from April.

The almost 10% pay boost, from £10.42 to £11.44 an hour, is the biggest cash increase in the National Living Wage in more than a decade and fulfils the government’s manifesto pledge to end low pay for those on the National Living Wage.  

Eligibility for the National Living Wage will also be extended by reducing the age threshold to 21-year-olds for the first time.  A 21-year-old will get a 12.4% increase, from £10.18 this year to £11.44 next year, worth almost £2,300 a year for a full-time worker. 

National Minimum wage rates for younger workers will also increase. 18-20-year-olds will also get a wage boost to £8.60 per hour – a rise of £1.11.

The Department for Business and Trade estimate 2.7 million workers will directly benefit from the 2024 National Living Wage increase.

Chancellor of the Exchequer Jeremy Hunt said: “Next April all full-time workers on the National Living Wage will get a pay rise of over £1,800 a year. That will end low pay in this country, delivering on our manifesto promise.

“The National Living Wage has helped halve the number of people on low pay since 2010, making sure work always pays.”

The minimum hourly wage for an apprentice is boosted next year, with an 18-year-old apprentice in an industry like construction seeing their minimum hourly pay increase by over 20%, going from £5.28 to £6.40 an hour.  

The National Living Wage was introduced in 2016 and currently sets the minimum hourly pay a person over the age of 23 earns when working. The new rate will now apply to 21- and 22-year-olds, and means that the government has met its ambitious target of lifting the National Living Wage to two-thirds of median earnings by 2024, ending low hourly pay for those on the National Living Wage.  

Since 2010, the proportion of workers on low hourly pay has more than halved from 21.3% to 8.9%, supported by increases to the National Living Wage. Personal tax thresholds have been doubled, meaning a working person can now earn £1,000 a month tax-free for the first time.  

Bryan Sanderson, Low Pay Commission Chair, said: “The National Living Wage has delivered an improved standard of living to thousands of people who care for our children and elderly, work in farms and shops and at many other essential jobs.

“These efforts over the lifetime of the NLW mean over £9,000 p.a. more to a full time worker without any increase in unemployment.

“This hasn’t been easy for employers, with the economy facing a range of unprecedented challenges in recent years. The high degree of political and economic uncertainty has made assessing and forecasting the performance of the economy, and therefore our task, very difficult. It is a tribute to my fellow Commissioners that we have continued to achieve consensus.

“Our new recommendation of a National Living Wage of £11.44 attempts to steer a path through this uncertainty and achieve the government target of two-thirds of the median wage, an outcome which if accepted would position the U.K. at the forefront of comparable economies.”

Getting more people into work and ensuring work pays is ‘a priority for the UK government’. The Chancellor will set out further measures in today’s Autumn Statement.

National Insurance cut reaches key milestone

  • Bill to deliver £330 national insurance contributions cut announced by the Chancellor at the Spring Statement gets Royal Assent
  • Change means threshold at which individuals start to pay NICs will rise by almost £3,000 and align with the income tax personal allowance from July
  • 70% of workers who pay NICs will pay less, even after accounting for the introduction of the Health and Social Care Levy

The UK government’s measures to tackle the cost-of-living crisis reached a key milestone this week, after a bill to raise NICS thresholds by almost £3,000 and deliver a tax cut worth over £330 for a typical employee in the year from July became law.

The National Insurance Contributions (Increase of Thresholds) Act, which received Royal Assent on Thursday, raises the threshold at which individuals start to pay NICs, aligning it with the income tax personal allowance at £12,570 from July 2022.

Around 2.2m working age people will be taken out of paying Class 1 NICs, applying to employees, and Class 4 NICs, for the self-employed, altogether. From July, around 70% of workers who pay NICs will be better off, even accounting for the introduction of the Health and Social Care Levy.

At the Spring Statement the Chancellor set out a tax plan that will help families with the cost of living, support growth in the economy, and ensure the proceeds of growth are shared fairly. As well as the NICs threshold rise it included a 12-month-long 5p cut to fuel duty and a cut in the basic rate of income tax, to 19p in the pound, taking effect in 2024.

Chancellor of the Exchequer Rishi Sunak said: “I know people are worried about making ends meet, with global supply chain challenges and Russia’s invasion of Ukraine driving up the cost of living for families across the UK.

“That’s why this tax cut for almost 30 million people is so important. And it’s part of further support worth over £22 billion in 2022-23 to help with the cost of living, by helping people with their energy bills and ensuring people keep more of their money.”

Thanks to above inflation increases in the income tax personal allowance and the NICs Primary Threshold since 2010-11, a typical basic rate taxpayer earning £24,000 in 2022-23 will pay £1,140 less in income tax and NICs than they otherwise would have, even after accounting for the Health and Social Care Levy.

That comprises £760 less income tax and around £380 less NICs in 2022-23 compared to what they otherwise would have paid.

The July threshold rise is a tax cut for a typical employee worth over £330 in the year from July 2022; the equivalent saving for a typical self-employed person, who pay lower NICs rates, would be worth over £250.

The UK Government has taken action worth over £22 billion next financial year to help with the cost of living including the fuel duty cut, increases to the NICs thresholds and an extra £500 million for the Household Support Fund to help those most in need.

They say they’re also helping low-income families keep more of what they earn by reducing the Universal Credit taper rate, boosting incomes by £1000 per average full time worker by increasing the National Living Wage and providing over £9 billion to help with rising energy bills.

Pay boost for millions as National Minimum and Living Wage rates go up from today

  • Around 2.5 million UK workers will receive a pay rise, as the National Minimum Wage and National Living Wage increase today 
  • £1,000 a year pay rise for full time workers following the largest ever uplift to the National Living Wage for workers aged 23 and over.
  • Business Secretary Kwasi Kwarteng: “While no government can control the global factors pushing up the cost of everyday essentials, we will absolutely act wherever we can to mitigate rising costs.”

Millions of UK workers will receive a pay rise from today (Friday 1 April), as the National Minimum Wage and National Living Wage rise comes into effect.

The uplift in wages, which will benefit around 2.5 million people, includes the largest ever increase to the National Living Wage. It will put £1,000 a year more into full-time workers’ pay packets, helping to ease cost of living pressures.

With today’s rise, the yearly earnings of a full-time worker on the National Living Wage will have increased by over £5,000 since the introduction of the National Living Wage by the Government in April 2016.

As a direct result of government action, the current number of employees on the payroll is over 600,000 more than pre-pandemic levels – and unemployment has fallen to 3.9%.

Business Secretary Kwasi Kwarteng said: “We have never been more determined to make work pay, and by providing the biggest cash increase ever to the National Living Wage from today, we are giving a boost to millions of UK workers.

“While no government can control the global factors pushing up the cost of everyday essentials, we will absolutely act wherever we can to mitigate rising costs.

“With more employees on the payroll than ever before, this government will continue to stand up for workers.”

Today’s uplift will particularly benefit workers in sectors such as retail, hospitality and cleaning and maintenance. Apprentices will also get a large 11.9% increase to their minimum hourly pay, with 21-22 year-olds seeing an immediate 9.8% rise. The National Living Wage, the minimum wage for over 23-year-olds, will now move up to £9.50 an hour.

Last year, the age threshold for the rate moved from age 25 to 23, meaning that more young workers are now eligible for a higher wage.

The new National Minimum Wage and National Living Wage rates are both statutory minimums, and businesses are encouraged to pay workers above these whenever they can afford to do so.

Recent studies show significant benefits for employers who pay their staff higher wages, which includes higher job retention and staff productivity.

In full, the increases from 1 April 2022 are:

Picture1

With the rates going up from today, workers across the UK are being urged to check they are being paid properly. This can be done by visiting the Check Your Pay site, which also offers advice on what to do if you are being underpaid.

The Government also today announced it will be launching a communications campaign in the coming weeks to help increase understanding among minimum and living wage earners around the wages they are legally entitled to, as well as the steps they can take if they are concerned they are being underpaid.

Record increases in global gas prices this year saw the Energy Price Cap, set by the independent regulator Ofgem, rise by 54%. While a worrying time for households, the price cap continues to insulate millions of households from high wholesale gas prices.

Today’s uplift comes alongside further government measures worth over £9.1 billion to support people across the UK with rising energy bills, with the majority of households receiving £350 in total. This will help over 28 million households affected by the large spike in global energy prices, protecting them from half of the average forecast bill rise.

The package includes a £150 rebate in Council Tax bills for all households in Bands A-D in England – 80% of households – with payments being made from today (1 April 2022), and a £200 reduction in energy bills for all households from October 2022 through the Energy Bills Support Scheme.

This contributes to wider government support to ease cost of living pressures worth £22billion next financial year as well as government plans to drive £6 billion into making homes more energy efficient over the next ten years, which is vital to keeping household energy costs down.

The government is also announcing further help for low-income households to meet energy costs with the publication of consultation responses on the extension of the Warm Homes Discount and Energy Company Obligation schemes. 

The Warm Homes Discount scheme is being extended until 2025/26 and expanded to reduce the energy costs of around £3 million low-income and vulnerable households every year, while the Energy Company Obligation scheme will see £1 billion annual funding until 2026 to help upgrade energy efficiency measures in 450,000 homes, cutting an average of £300 off energy bills. 

Going even further to ease the cost of living, last week as part of the Spring Statement, the Chancellor Rishi Sunak announced a new Tax Plan, including cuts to fuel duty by 5p per litre, and that energy efficiency measures can be installed in homes VAT free for the first time ever.

The Chancellor Rishi Sunak said: “This historic increase will mean a pay rise for millions of hard-working Brits – with an average full-time worker pocketing an extra £1,000 a year.

“We’re doing everything we can to ensure people keep more of what they earn in these challenging times, with a new Tax Plan that delivers tax cuts for nearly 30 million people as well as £22billion to help with the cost of living.”

Bryan Sanderson Chair of the Low Pay Commission (LPC) said: “The Business Secretary’s strong support is especially welcome at this difficult time. 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.

“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.”

‘Large’ minimum wage increase to boost low-paid workers’ incomes

The National Living Wage (NLW) will rise to £9.50 from 1 April 2022. This represents an increase of 59 pence or 6.6 per cent.

The Low Pay Commission’s recommendations set the minimum wage back on track to reach the Government’s target of two-thirds of median earnings by 2024. The recommendations were unanimously agreed by Commissioners and accepted in full by the Government.

Read the LPC’s recommendations to Government here

The increases announced yesterday will support the wages and living standards of low-paid workers at a time when pay growth is robust across the economy. They come against a backdrop of strong GDP forecasts, employment returning to pre-pandemic levels and businesses advertising record numbers of vacancies.

Bryan Sanderson, Low Pay Commission Chair, said: “The rates we recommended will put money in the pockets of care-workers, food distributors and many other groups of the lowest-paid members of our society up and down the UK. Many of them have made a vital contribution during the last few difficult months.

“The impact on communities is considerable – Blackpool for example will benefit by at least £6.1m from pay increases to its low-paid workers.

“The pandemic has been an exceptionally difficulty period for businesses and workers alike, but the labour market has recovered strongly and the economy is expected to continue to grow over the next year. This is attributable in no small part to comprehensive Government support.

“Our value as a social partnership is to find a consensus recommendation acceptable to both sides of industry.”

Alongside the NLW increase announced yesterday, the Commission recommended significant rises in National Minimum Wage (NMW) rates for younger workers.

The 21-22 Year Old Rate will increase to £9.18, narrowing the gap with the NLW and leaving this age group on course to receive the full NLW by 2024.

NMW rates for 18-20 and 16-17 year olds will increase in line with underlying wage growth, protecting earnings for young workers while recognising their higher risk of unemployment.

The minimum wage for apprentices will increase by 51p, bringing it in line with the 16-17 Year Old Rate.

Rate from April 2022Current rate (April 2021 to March 2022)Increase
National Living Wage£9.50£8.916.6%
21-22 Year Old Rate£9.18£8.369.8%
18-20 Year Old Rate£6.83£6.564.1%
16-17 Year Old Rate£4.81£4.624.1%
Apprentice Rate£4.81£4.3011.9%
Accommodation Offset£8.70£8.364.1%

Commissioners’ advice to the Government this year covers several areas.

The LPC has reviewed minimum wage rules for domestic workers and recommended that an exemption that has prevented au pairs and domestic workers from earning the minimum wage is removed.

Commissioners have also examined the evidence around the NLW’s impacts on different regions of the UK and on groups of workers with protected characteristics.

Budget Briefing: Wage boost for millions of low-paid workers

  • The UK’s lowest-paid workers will receive a pay rise next year as the National Living Wage increases from £8.91 to £9.50 an hour – an extra £1000 a year for a full-time worker.
  • From 1 April, young people and apprentices will also see their wages boosted as the National Minimum Wage for people aged 21-22 goes up to £9.18 an hour and Apprentice Rate increases to £4.81 an hour.
  • This builds on the government’s continued action to support people with the cost of living including through the £500 million Household Support Fund, Energy Price Cap, Seasonal Cold Weather Payments and Warm Homes Discount, and keeps the government on track to meet its target to end low pay by 2024-25.

MILLIONS of the UK’s lowest paid workers will benefit from a pay rise next year, as the UK government takes further action to help the country’s poorest households.  

The Chancellor is expected to confirm at Wednesday’s Budget and Spending Review that the National Living Wage will increase from £8.91 to £9.50 an hour – a 59p an hour boost which means a full-time worker on the National Living Wage will see a pay rise of more than £1,000 a year.

The National Living Wage was introduced in 2016 and sets the minimum hourly pay a person over the age of 23 can earn when working.

Rishi Sunak is also set to announce a wage rise for young people under the age of 23. For those aged 21-22 the National Minimum Wage rate increases to £9.18 an hour, up from £8.36 – a 82p increase.

With apprenticeships a key part of our Plan for Jobs, the minimum hourly wage for an apprentice will also see a boost next year, with an 18 year old apprentice in an industry like construction seeing their minimum hourly pay increase by nearly 12%, going from £4.30 to £4.81 an hour.

Chancellor of the Exchequer Rishi Sunak said: “This is a government that is on the side of working people. This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.” 

By introducing these changes, which are broadly consistent with previous increases, the government accepts all recommendations made by the Low Pay Commission – an independent advisory board which brings together economists, employer and employee representatives.

“The government remains committed to meeting its ambitious target of a National Living Wage of two-thirds of median earnings and expanding it to include workers over the age of 21 by 2024, provided economic conditions allow.

Since 2010, this government has continuously supported working people on the lowest wages – doubling personal tax thresholds, doubling free childcare for eligible working parents – worth up to £5,000 per child per year. It has also expanded Free School Meals to all five to seven-year-olds – saving families £400 a year.

This builds on recent action to support the lowest earners in the winter months, through measures like the £500 million Household Support Fund to help families with their food and utility costs, the Energy Price Cap, Seasonal Cold Weather Payments, and the Warm Homes Discount to ensure low-income households can keep their homes warm over the winter period.

As we enter the next stage of the Plan for Jobs, an extra £500m will also be invested to give people the skills and support they need to find good work as we build back better from the pandemic.

National Living Wage extended to younger workers

The age threshold for the National Living Wage changes from 25 to 23 as the rate increases today (1 April).

The National Living Wage (NLW) will increase on Thursday 1 April to £8.91, giving a real-terms pay rise to millions of workers. At the same time, the age threshold for the rate will move from 25 to 23, meaning that thousands of young workers will be eligible for a higher wage floor.

These changes follow recommendations made to the Government by the Low Pay Commission (LPC) and are a first step towards the target of the NLW reaching two-thirds of median earnings for workers aged 21 and over by 2024.

In the 3 March Budget, the Government asked the LPC to monitor and evaluate the impact of these changes and recommend the rate that should apply from 2022. They asked the LPC to monitor developments in the labour market and advise on whether the target is achievable in the timeframe. The LPC will make its recommendations to Government on the 2022 National Minimum Wage rates in October.

Bryan Sanderson, Chair of the Low Pay Commission, said: “This has been an extraordinary year for all of us, but particularly for minimum wage workers, many of whom have worked throughout the pandemic in frontline roles or have worked in the sectors that have been hardest hit by lockdown measures.

“This week’s increase in the NLW is our first step towards the Government’s target of two-thirds of median earnings. It is a real-terms increase, meaning that an hour’s work can buy more than it could last year, at the start of the pandemic. The level of the new rate however also reflects the need to protect workers from job losses.

“Importantly, the NLW will now apply to workers aged 23 and over. This is an important change which is strongly endorsed by the Commission. Young people should be fairly rewarded for their work. We will seek to understand how young people’s pay and employment are affected by this in our consideration of a further reduction in the NLW age qualification to 21.”

The LPC has today published a short report which outlines how we will respond to our remit and approach our recommendations on the April 2022 rates, in the context of economic uncertainty and recovery from the pandemic.

The report sets out a pathway to the target of two-thirds of median earnings. Our best current estimate for the on-course NLW rate in 2022 is £9.42, a 5.7 per cent increase. However, this is subject to more uncertainty than usual and is likely to change. We will publish an updated path in the summer.

The other rates of the National Minimum Wage will also increase alongside the NLW.

Previous rateRate from April 2021Increase
National Living Wage£8.72£8.912.2%
21-22 Year Old Rate£8.20£8.362.0%
18-20 Year Old Rate£6.45£6.561.7%
16-17 Year Old Rate£4.55£4.621.5%
Apprentice Rate£4.15£4.303.6%
Accommodation Offset

National Living Wage increases today

The National Living Wage (NLW) will increase today (Wednesday 1 April) to £8.72, giving a pay rise to thousands of workers at the frontline of the UK’s response to Covid-19.

This rise follows recommendations made to the Government by the Low Pay Commission (LPC) in the autumn. It means the rate reaches the target of 60 per cent of median earnings, originally set by the Government in 2015.

In the 11 March Budget, the Government confirmed its ambition for the NLW to continue increasing towards a new target of two-thirds of median earnings by 2024. It asked the LPC to advise on whether the economic evidence warranted these increases. The LPC will make its recommendations to Government on the 2021 National Minimum Wage rates in October.

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.”

The LPC has published a short report looking at the NLW’s path to the 60 per cent target and outlining how we will approach the new two-thirds target. This report does not set out a pathway to the new target, given the uncertainty over the current and future state of the labour market.

The other rates of the National Minimum Wage will also increase alongside the NLW:

Previous rate Current rate from 1 April 2020 Increase
National Living Wage £8.21 £8.72 6.2%
21-24 Year Old Rate £7.70 £8.20 6.5%
18-20 Year Old Rate £6.15 £6.45 4.9%
16-17 Year Old Rate £4.35 £4.55 4.6%
Apprentice Rate £3.90 £4.15 6.4%
Accommodation Offset £7.55 £8.20 6.4%

New research shows overwhelming support for further increases in order to tackle low pay.

The report, based on a large-scale representative survey of adults across the UK and focus groups with low paid workers, found that two in three adults (66%) thought that the wage floor was too low, and that it should be increased, with just one in fifty (2%) saying it was too high. Support for boosting the minimum wage was highest among young adults, low income households, and those in lower socio-economic groups.

The National Living Wage – the mandatory minimum wage for workers aged 25 and over – increases by 51p to £8.72.

The largest cash boost to the minimum wage since its introduction comes at a difficult time for the economy and household incomes, with many businesses and workers deeply affected by the coronavirus crisis.

The increase was announced in December, when employment stood at a record high, and when there was no indication of the scale of the damage coronavirus would cause.

Even before the current crisis, half (48%) of adults surveyed agreed that government should take a cautious approach to setting the wage floor to avoid an increase in unemployment; while one in three (37%) said government should take a more ambitious approach to increasing the minimum wage, even if it risked a small increase in unemployment.

There was however strong support for the government’s long-term plan to increase the National Living Wage to two thirds of median pay by 2024 – forecast to be £10.50 – and extend it to all workers aged 21 and over. Nearly seven in ten adults (66%) supported the proposal and fewer than one in ten (9%) opposed.

Despite the increase in the minimum wage in recent years, the number of adults in in-work poverty had grown, even before the coronavirus crisis. Low paid workers described the impact poverty has on their lives; from being unable to afford the basics and getting into debt, to having to work multiple jobs.

While low paid workers supported a higher minimum wage, many were sceptical about the extent to which it will benefit them. Low paid workers felt that increases in pay as a result of a higher minimum wage would be offset by lower Universal Credit income, leaving them little better off.

Low paid workers were also pessimistic about how businesses would respond to a higher wage floor, with many fearing their employer would cut back on other benefits, or reduce hours or staffing in response.

The report is the first in a programme led by Learning and Work Institute and Carnegie UK Trust, exploring the impact of a higher minimum wage on workers, employers and the economy. The programme will set out how a higher wage floor could be part of a broader strategy to tackle low pay and in work poverty and promote good work.

Joe Dromey, deputy director of research and development at Learning and Work Institute said; “The minimum wage has helped tackle extreme low pay without costing jobs. While this increase comes at a difficult time, it will mean a welcome pay rise for millions of workers.

“There is overwhelming support for future increases in the minimum wage – particularly among low paid workers. With the economy likely to take a big hit from coronavirus, the government will need to think carefully about how this can be delivered, but it should remain focused on both tackling low pay and in-work poverty.”

Douglas White, Head of Advocacy at the Carnegie UK Trust, said; “Decent pay is a critical aspect of good work, vital to help workers provide for themselves and their families, and clearly maintaining incomes is at the forefront of people’s minds at this time of crisis.

“National Minimum Wage policy is not the only route to supporting the living standards of workers – Government has also taken significant steps in recent weeks to maintain people’s incomes through the Coronavirus Jobs Retention Scheme and the social security system.

“However, we welcome this week’s uprate in the Minimum Wage, and we encourage the UK Government to continue their commitment to an ambitious minimum wage policy. Our research demonstrates that even before this current crisis, far too many workers feel that wages do not cover the cost of living and that despite working hard they are being pushed in poverty.”

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Biggest ever increase to National Living Wage comes into effect

  • Full-time workers receiving National Living Wage will be more than £2,750 better off a year compared to 2015, when the rate was first announced
  • the National Living Wage will go up today by the highest rate since it was first introduced, increasing by almost 5% to £8.21 per hour
  • 2.1 million workers set to benefit from minimum wage increases, including almost 800,000 retail and hospitality workers
  • increases to the minimum wage rates form part of government’s commitment to protect the UK’s lowest paid workers through its modern Industrial Strategy

1.8 million workers earning the National Living Wage (NLW) will receive an additional £690 over the year from today (Monday 1 April), as the biggest ever increase to NLW comes into effect. Continue reading Biggest ever increase to National Living Wage comes into effect