National Living Wage increase raises income of low-paid workers

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The National Living Wage (NLW) will increase on 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 rateCurrent rate from 1 April 2020Increase
National Living Wage£8.21£8.726.2%
21-24 Year Old Rate£7.70£8.206.5%
18-20 Year Old Rate£6.15£6.454.9%
16-17 Year Old Rate£4.35£4.554.6%
Apprentice Rate£3.90£4.156.4%
Accommodation Offset£7.55£8.206.4%

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