Consultation on the National Living Wage and National Minimum Wage rates

18 April 2016

The Low Pay Commission (LPC) has launched a consultation on the level of the UK’s minimum wage rates to apply from April 2017- 2018, on which they have been asked to make recommendations to the Government by October 2016. The background being the recent introduction of the National Living Wage (NLW), a higher rate for workers aged 25 and over. For the NLW, the LPC are asked to advise on the path to 60 per cent of median earnings by 2020 ‘subject to sustained economic growth’.

For the rates affecting those aged under 25 and apprentices, the LPC are asked to continue to make recommendations on their traditional basis of ‘helping as many low-paid workers as possible without damaging their employment prospects’. All the rates are being aligned to run from April.

On the National Living Wage, the LPC are particularly interested in:

• evidence on the effect of the introductory rate of £7.20 on workers, employers, the labour market and the economy - including how firms and workers are adjusting and impacts on pay, terms and conditions, income, hours, progression, employment and competitiveness;
• views of the projected ‘on target’ rate for April 2017. The figure will change between now and the autumn as new pay data and forecasts are published but the current estimate is to be around £7.60 in April 2017, rising to just over £9 by 2020.
• views on the LPC’s proposed approach to making recommendations on the NLW (set out in the consultation letter).

On the other minimum wage rates (21-24, 18-20, 16-17, apprentices), the LPC are particularly interested in:

• views on how to adjust the level of the recommendations given that an April 2017 increase will come six months after the forthcoming October 2016 increases. This reflects the fact that the NLW was introduced on a different calendar to the other rates whose schedule is being revised to align with it. The consequence is two increases in 18 months rather than the 24 that would otherwise apply.
• evidence on the impact of the rates on younger workers’ employment prospects including evidence on how widely the new 21-24 Year Old Rate is used, and whether the NLW has affected the employment prospects of workers aged under 25.

Full questions are in the consultation letter. The deadline for responses to the consultation is 5pm on 29 July 2016.

CIPP comment Look out for a survey on this as the Policy Team will be asking for your views and experiences.