Philip Hammond, the UK Chancellor, has announced that from April 2019, the statutory national living wage (NLW) will increase.
- For those aged 25 and over, it will go up from £7.83 to £8.21 hourly (a 4.9% rise).
- For those aged 21 to 24, it will go up from £7.38 to £7.70 hourly (a 4.3% rise).
- For those aged 18 to 20, it will go up from £5.90 to £6.15 hourly (a 4.2% rise).
- For those aged 16 to 17, it will go up from £4.20 to £4.35 hourly (a 3.6% rise).
- The apprentice rate will go up from £3.70 to £3.90 hourly (a 5.4% rise).
The 4.9% rise for those aged 25 and over means that those workers will get a pay increase above current inflation levels. Yearly, it is an increase of approximately £690 (for those in full-time employment).
Since the NLW was introduced in April 2016, the Treasury comments that the annual pay packet of a minimum wage worker will have grown by more than £2,750.
The Low Pay Commission (LPC) – which recommended the rise – estimates that the increase will aid around 2.4 million employees. Bryan Sanderson, the LPC Chair, noted that the lowest-paid workers will receive a pay increase that exceeds average earnings.
Mr Sanderson commented that the economy, albeit muted, has reached the LPC’s criteria for sustained growth, while the labour market has been fairly buoyant over the last year. The LPC therefore suggests an increase by 2020 to 60% of average earnings. Based on current projections, the LPC calculates that NLW rates should go up to £8.62 in 2020.
The government will consult with the LPC on its remit and recommendations for the national minimum wage in upcoming months.
Mr Sanderson suggested real-terms rises in the rates of national minimum wage earned by apprentices and younger workers, since labour markets for these two groups are performing well. These amounts will carry on growing more quickly than both average earnings and inflation.
Mr Sanderson said the LPC chose lower increases than were suggested last year, as labour markets for young workers were a little weaker then, and there wasn’t enough evidence to properly comprehend the effect of the biggest increases in ten years which were introduced in April 2018. However, he noted that rises in 2019 will be among the biggest recorded increases to date.