Millions of workers on the minimum wage will receive a higher percentage increase in pay than most other workers across the economy.
The National Living Wage (NLW) will increase today by 6.6 per cent 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. This is the largest ever cash increase to the naional Living Wage, giving full-time workers aged over 23 £1,000 a year more in their pay.
These increases follow recommendations made to the Government by the Low Pay Commission (LPC) 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.
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. This emergency brake will 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.
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
