Low Pay Commission Annual Report 2022

20 January 2023

We have received confirmation from the Low Pay Commission (LPC) of their published annual report for 2022.

The LPC submitted its recommendations to the Government in October 2022 on the rates of the National Minimum Wage (NMW), including the National Living Wage (NLW) to apply from 1 April 2023. The government accepted these recommendations in full and the rates which will apply are as follows:

 

Rate from April 2023

Current rate (April 2022 to March 2023)

Increase

National Living Wage

£10.42

£9.50

9.7%

21-22 Year Old Rate

£10.18

£9.18

10.9%

18-20 Year Old Rate

£7.49

£6.83

9.7%

16-17 Year Old Rate

£5.28

£4.81

9.7%

Apprentice Rate

£5.28

£4.81

9.7%

Accommodation Offset

£9.10

£8.70

4.6%

The key findings from the report were found as below and as the LPC states:

  • economic context and outlook:

‘‘The outlook is for poor GDP growth in the near term. Inflation, while difficult to predict, is likely to remain high for some time. The combination of ongoing high energy costs and higher interest rates to tackle inflation mean disposable incomes are expected to continue falling in real terms. With margins under pressure from rising costs, decreasing credit availability and the weaker medium-term outlook, business investment is likely to remain subdued’’

  • the labour market:

‘‘While vacancy levels are very high they have passed their peak and started to fall, albeit slowly. Labour market indicators tend to lag behind changes in the macro economy. As the effects of the substantial hits to real incomes and low investment outlined in Chapter 1 start to emerge, we should expect vacancies to continue falling and unemployment to rise. Indeed, the majority of HM Treasury’s panel of independent forecasters expect unemployment to rise next year. A looser labour market will mean less pressure on wages and, again, the HMT panel expect lower wage growth next year than this year’’

  • youth rates:

‘‘21 and 22 year olds are due to become entitled to the NLW in 2024, and the majority of our stakeholders continue to support this move. Although the NLW remains high relative to median pay for this age group, the majority are already paid at or above the NLW’’

  • apprentices:

‘‘In April 2022 the Apprentice Rate was raised into alignment with the 16-17 Year Old Rate, a change which we recommended following a detailed review of the rate concluded in 2020’’

  • accommodation offset:

‘‘The value of the Accommodation Offset as a proportion of the NLW will not significantly increase until we have some assurance that there are robust minimum standards in place for accommodation and that these are enforced''

“We recommend a minimum hours requirement before accommodation costs can be deducted, for workers at risk of no or very low pay as a result of accommodation charges''

“We recommend that seafarers be exempt from the Accommodation Offset while on board ship.We recommend that BEIS and the Home Office work together to address the interactions between the Accommodation Offset and the minimum hourly rates set for seasonal workers visas in agriculture’’.

The full report (polite warning: it’s over 300 pages long) is also available and sets out in depth the evidence and analysis which commissioners relied on in reaching their recommendations.

The CIPP are proud to have held roundtable events with the LPC to allow our members to give qualitative feedback directly to commissioners. If you are interested, please keep an eye out for future roundtable invites which will be sent to full, fellow and chartered members. Thank you to all members who took part last year or fill out our survey, your contributions are greatly appreciated.


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