CIPP response to LPC consultation on National Minimum Wage rates for April 2021

04 June 2020

The CIPP has submitted its response to the Low Pay Commission’s (LPC) consultation to help inform its recommendations on what the National Living Wage (NLW) and National Minimum Wage (NMW) rates should be from April 2021.

The LPC sought to gather feedback on the subject of the effects of recent increases to the NMW and NLW rates, on both employers and employees, particularly in consideration of current broader economic issues, such as the outbreak of coronavirus, and the UK’s exit from the EU. This year’s consultation placed additional focus on the affordability of increasing the NLW to £9.21 in April 2021, and views on the LPC’s remit to 2024, which would see a new NLW target of two-thirds of median earnings, and the NLW age threshold lowered to 21, from the current age of 25. There was also particular interest in the future of the Apprentice rate in this year’s consultation.

Our response included a summary of both quantitative and qualitative data extracted from an electronic survey that ran throughout May 2020, and also incorporated feedback received at a virtual Think Tank roundtable session on the topic of minimum wage rates from 2021 that the CIPP hosted.

Unsurprisingly, survey results revealed that several concerns have emerged in relation to the future of minimum wage rates, due to the COVID19 outbreak, which include:

  • The fact that businesses have had to close premises and furlough their staff
  • Understanding of gov.uk guidance pertaining to furlough and the Coronavirus Job Retention Scheme (CJRS)
  • Concerns about the increased risks of redundancies, particularly in certain sectors
  • Affordability of minimum wage rates in the coming years for employers who pay at, or just above, the National Minimum Wage rates
  • Concerns surrounding the accurate recording of working hours for individuals working at home, as a result of the coronavirus crisis
  • The fact that recent focus on coronavirus may have meant that changes to NMW guidance have gone unnoticed by employers
  • In the public sector, there are concerns that the COVID-19 crisis will result in a period of austerity

Other, more general key findings include:

  • 93% of respondents felt that the outbreak of coronavirus will have had an impact on their employer’s perception of what the minimum wage rates should be
  • 81% of employers reported that, since its introduction in April 2016, the NLW has not impacted the number of staff that they employ
  • 90% of respondents confirm that the NLW has not affected the number of hours worked by staff
  • 54% state that the NLW has not significantly impacted the pay structures offered within their businesses, but it has put pressure on maintaining pay differentials and banding
  • 41% of respondents confirmed that they did not think the LPC should seek to meet its target rate for the NLW of £10.69 by April 2021

The response document provides much more detailed information surrounding the information gathered from respondents, and can be located here.

CIPP comment

The CIPP is delighted to have had the opportunity to respond to the LPC’s consultation on minimum wage rates from April 2021, but is disappointed that the outbreak of coronavirus has hindered face-to-face meetings, and also prevented the LPC from carrying out its visits programme. Now, more than ever, it would have been useful for the Commission to view the effect of minimum wage rates at the coalface.

The CIPP hopes that stakeholder engagement with BEIS will continue into the future, and that the visits programme can be resumed once the situation with coronavirus has stabilised

 


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