20 year anniversary of the National Minimum Wage
01 April 2019
Today the Low Pay Commission is celebrating the 20th anniversary of the National Minimum Wage and recognising the transformative effect it has had on the UK’s labour market.
The National Minimum Wage (NMW) was introduced on 1 April 1999, and originally applied to workers aged 22 and over. The National Living Wage (NLW) is the statutory minimum wage for workers aged 25 and over. It was introduced in April 2016 and has a target of 60% of median earnings by 2020, subject to sustained economic growth. The most recent forecasts imply a projected rate of £8.67 in 2020.
The introduction of the NMW had a significant impact on the lives of the lowest paid. Until then, it had been the norm for low-paid workers to see their earnings grow more slowly than the average, regardless of wider economic conditions. The earnings of the lowest-paid rose by much less than the average throughout the 1980s and 1990s. The NMW and NLW have reversed this norm: since 1999, the lowest paid have seen their hourly pay grow faster than all other workers.
And in addition, many more workers have benefited indirectly – the effects of an increase in the minimum wage ripple up the pay distribution, as employers maintain a ‘differential’ between the minimum rate and pay for managers and team leaders just above.
With each annual increase, the NMW and NLW have increased the pay of up to 30% of all jobs – up to 7 million workers on current employment levels. Between 1999 and 2018, we estimate that the total benefit to workers of minimum wage increases has been £60 billion. The bottom 1% of workers were paid £2.70 an hour more in real terms in 2018 than they otherwise would have been – an additional £5,000 a year for the lowest-paid full-time workers.
Read the Low Pay Commission’s new report ’20 years of the National Minimum Wage’ here
|
|
Rate up to 31 March 2019 |
Rate from 1 April 2019 |
% increase |
|
National Living Wage |
£7.83 |
£8.21 |
4.9% |
|
21-24 rate |
£7.38 |
£7.70 |
4.3% |
|
18-20 rate |
£5.90 |
£6.15 |
4.2% |
|
16-17 rate |
£4.20 |
£4.35 |
3.6% |
|
Apprentice rate |
£3.70 |
£3.90 |
5.4% |
|
Accommodation offset |
£7.00 |
£7.55 |
7.9% |
Guidance on Calculating the minimum wage
- The CIPP run a one day course on National Minimum Wage and other worker entitlements which is available face to face -