National Living Wage increases; LPC hints at ‘emergency brake’

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Photo: DANIEL SORABJI/AFP/Getty Images

The increase to the National Living Wage (NLW) and other rates of the National Minimum Wage has come into force today.

The NLW rises by 6.2 percent to £8.72, following recommendations made to the government by the Low Pay Commission (LPC).

The rate has reached the target of 60 percent of median earnings, originally set by the government in 2015. During the Budget speech last month, Chancellor Rishi Sunak confirmed that the government plans to increase the NLW towards a new target of two-thirds of median earnings by 2024.

LPC chair Bryan Sanderson hinted that the commission would consider applying the ‘emergency brake’ – recommending the government to review its target or timeframe as a result of any emerging risks – on account of the COVID-19 pandemic.

“The ongoing COVID-19 pandemic clearly represents a very challenging set of circumstances for workers and employers alike, and will require us to review whether the emergency brake is required when we next provide our advice to the government,” he said.

Responding, James Lowman of the Association of Convenience Stores (ACS), urged the LPS to give “serious consideration” to the provision when making its recommendations.

“Increases in the National Minimum and Living Wage rates have a significant impact on retailers every year, so during this unprecedented uncertainty, it is important that the Low Pay Commission gives serious consideration of an ‘emergency brake’ to revise its wage projections to 2024,” the ACS chief executive said.

“We will continue to work with the Low Pay Commission to outline the pressures that retailers face when dealing with increased employment costs.”

The LPC will make its recommendations to government on the 2021 National Minimum Wage rates in October. Next year, the reduction in age threshold for the NLW, from 25 to 23, will also take effect.

The new rates are as follows:

Previous rateCurrent rate from 1 April 2020Increase
National Living Wage£8.21£8.726.2%
21-24 Year Old Rate£7.70£8.206.5%
18-20 Year Old Rate£6.15£6.454.9%
16-17 Year Old Rate£4.35£4.554.6%
Apprentice Rate£3.90£4.156.4%
Accommodation Offset£7.55£8.206.4%