8 April 2021
The independent body which advises the Government on the levels of the National Living Wage (NLW) and National Minimum Wage (NMW) has launched its annual consultation seeking evidence of their impact to inform its recommendations on the 2022 rates.
The Low Pay Commission (LPC) will put its suggestions to the Government in the autumn.
On 1 April 2021, the NLW increased from £8.72 to £8.91 and the age threshold for the rate was reduced from 25 to 23. The Commission’s recommendations on the NLW will be guided by the Government’s target for the rate to reach two-thirds of median earnings by 2024, taking economic conditions into account.
For the remaining NMW rates (the 21 and 22-year-old rate, the 18 to 20-year-old rate, the 16 and 17-year old rate and the apprentice rate), the LPC’s recommendations will be based on its usual approach of raising the rate as high as possible without damaging employment.
“Our main concern is to gather evidence on the effects on employers and workers of the recent increases in the NMW and NLW,” the Commission explained. “As each year, we are seeking views on business conditions and the economic outlook, in light of the Covid-19 pandemic and the support measures the Government has implemented in response to it.”
The LPC would be particularly interested to hear about:
The affordability and effects of an increase in April 2022 to an NLW rate of £9.42. This is its current central projection for next April’s rate, with a likely range of 6p above or below this figure.
The NLW pathway to 2024. Based on forecasts, its current central projection for the April 2024 NLW rate is £10.33, with a likely range of 23p above or below this figure. The age threshold for the NLW is also due to come down to 21 by 2024 at the latest.
The effects of recent increases in the NLW and other rates, and their impacts in particular on employment and hours, pay and benefits, productivity, prices and profits.
Full details of the LPC request (including the deadline for submitting comments: 18 June 2021) can be found here.