Last reviewed 10 September 2020
A report by the Sunday Telegraph suggests that the Government may be considering scrapping the annual increase of the National Minimum Wage (NMW) and National Living Wage (NLW) next year.
The NMW applies to all workers and is paid at different rates according to age. The NLW applies to workers aged 25 and over. This is usually reviewed and increased in April of every year with the year 2020 seeing a record increase.
This news comes as the coronavirus’ impact on the financial stability of many organisations raises questions as to whether these organisations will be able to afford wage increases. It is likely, according to the newspaper, that Chancellor Rishi Sunak will be making the announcement in the upcoming Budget this Autumn.
In the fourth quarter of 2019, the Government pledged that it would increase the national wage to reach “60% of median earnings in the next four years”. However, the Low Pay Commission — an organisation which gives the Government advice on minimum wage uprating — has stated that the Government may have to withdraw from this plan in order to help businesses economically recover.
The Chair for the Low Pay Commission, Bryan Sanderson, has said that: “There are not many winners in today's uncertain world. Our contribution to help steer a path through the complexity will be to provide a recommendation founded on rigorous research and competent analysis which has the support of academics and both sides of industry.”
On the other hand, the Trade Union Congress (TUC) has raised the point that an “emergency break” would be the wrong move, especially for key workers who have not stopped working, even during the peak of the pandemic. Frances O'Grady, General Secretary of the TUC went further to say that rates should be increased to reflect the “real living wage” — £10.75 per hour, only being paid on a voluntary basis by approximately 6000 organisations.
She continued by saying that “the Government must not renege upon its commitment to raise the minimum wage. Millions of low-paid workers are struggling to make ends meet. That's not right during a pandemic — or at any time”. Her sentiments were shared by Andy Burnham, the Mayor of Greater Manchester.
Organisations would be positively impacted if the Government were to implement this “emergency break”, as it will mean that compulsory pay rises will be less likely and organisations in financial difficulty can focus entirely on getting over the coronavirus hump. However, the TUC's argument may be persuasive enough to dissuade the Government.
While many organisations have spoken on this issue since the news story broke on the morning of 7 September, organisations should be aware that the information has not come directly from the Government, or any Ministers within Parliament, so they need not rely on such information until it has been confirmed. However, they can prepare for any possible outcome.