The UK government has accepted the full recommendations made by the Low Pay Commission at the end of October this year. The recommended increases in the National Living Wage (NLW) and National Minimum Wage (NMW) rates will come into force from April 2021.
The NLW, which currently only applies to workers aged 25 or over, will increase by 2.2% and will be extended to 23 and 24-year-olds for the first time. The apprentice rate has benefited from the biggest increase rising by 3.6% and reflects the Commission’s aim of apprentices receiving the same salary as 16 to 17-year-olds by 2022.
The new rates will be:
- Aged 23 or over (NLW rate): £8.91 (up 2.2% from £8.72).
- Aged 21 to 22: £8.36 (up 2% from £8.20).
- Aged 18 to 20: £6.56 (up 1.7% from £6.45).
- Aged 16 to 17: £4.62 (up 1.5% from £4.55).
- Apprentice rate: £4.30 (up 3.6% from £4.15).
- Accommodation offset: £8.36 per week (up 2% from £8.20).
The Commission is an independent body that advises the government on the NLW and the NMW. The recommendations took into account the context of the COVID-19 economic shock on employers. Bryan Sanderson, Chair of the Low Pay Commission, said: “Recommending minimum wage rates in the midst of an economic crisis coupled with a pandemic is a formidable task. The difficulty in looking forward even to next April is daunting. There are strong arguments concerning both low-paid workers – many performing critically important tasks – and the very real solvency risks to which small businesses are currently exposed. In these unprecedented conditions, stability and competence are prime requirements.”
It is thought that the increase in the NLW will mean that low-paid workers’ incomes should rise broadly in line with predicted wage growth, and modestly ahead of projected increases in prices, meaning low-paid workers’ living standards should be protected. It is reported that Commissioners do not believe the increase presents a significant additional risk to employment prospects, beyond the already challenging outlook.