28 March 2024

The Low Pay Commission (LPC) informs the UK government with regards to the National Minimum Wage (NMW) rates each year and the wider labour market context of any changes made to them.

For the past few years, they have set their sights on the National Living Wage (NLW) being at a level equal to two-thirds of median hourly earnings in the UK and applying to those ages 21 and over. From April 2024, this target will become a reality with the rate expected to be around that target.

This leaves the LPC with no clear target or priority to aim for. The latest report from LPC details their new targets and requests from the government to allow them to achieve their goals effectively. The full report expands further on the wider labour market and impacts of NMW changes, but the key recommendations, taken from the report, are:

  1. Government should decide what policy outcome it wants to achieve with the minimum wage and ensure that it aligns with other policies.
  2. For the next steps of the minimum wage the Government should either adopt a further target or return to a principle-based or qualitative approach.
  3. Government should consider the case for lowering the gap between the youth rates and adult rates and for further reducing the NLW age of eligibility, and ask us to take this forward in a future remit.
  4. If Government agrees with recommendation 3 above on youth rates, it should consider the case for reforming the Apprentice Rate to a simple discount of the minimum wage that applies for that age group during their first year and ask us to take this forward in a future remit. For apprentices aged 16 and 17, the rate should remain aligned with the 16-17 Year Old Rate.
  5. Government should implement our 2018 recommendations on one-sided flexibility. These are:
    1. a right to switch to a contract that reflects a worker’s regular working pattern
    2. a right to reasonable notice of work schedules
    3. a right to compensation if a shift is cancelled or curtailed at short notice
  6. Government should provide us with better quality and more timely data, so we can better evaluate the effects of the minimum wage. We discuss a range of improvements the Government could make in Chapter 7. The three most important steps Government should take are:
    1. The Department for Business and Trade should work with HMRC to provide us more timely access to detailed employer payroll data. This would allow us to evaluate the latest minimum wage upratings more fully.
    2. HMRC should go ahead with their current plans to collect hours of work as part of their payroll data. This will allow us to better evaluate the minimum wage and help HMRC to enforce the minimum wage.
    3. The ONS should publish a report on how and why different official data sources on employment and wages have diverged since 2019. They should also explain how reliable each data source is for different purposes.

The CIPP are keen to get involved with future LPC thinktanks on the topic, so keep an eye out for details on those.


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