Large minimum wage increase to boost low-paid workers’ incomes

Large minimum wage increase to boost low-paid workers’ incomes

The National Living Wage (NLW) will rise to £9.50 from 1 April 2022. This represents an increase of 59 pence or 6.6 per cent.

The Low Pay Commission’s recommendations set the minimum wage back on track to reach the Government’s target of two-thirds of median earnings by 2024. The recommendations were unanimously agreed by Commissioners and accepted in full by the Government.

The increases announced today will support the wages and living standards of low-paid workers at a time when pay growth is robust across the economy. They come against a backdrop of strong GDP forecasts, employment returning to pre-pandemic levels and businesses advertising record numbers of vacancies.

Bryan Sanderson, Low Pay Commission Chair, said:

The rates we recommended will put money in the pockets of care-workers, food distributors and many other groups of the lowest-paid members of our society up and down the UK. Many of them have made a vital contribution during the last few difficult months.

The impact on communities is considerable Blackpool for example will benefit by at least £6.1m from pay increases to its low-paid workers.

The pandemic has been an exceptionally difficulty period for businesses and workers alike, but the labour market has recovered strongly and the economy is expected to continue to grow over the next year. This is attributable in no small part to comprehensive Government support.

Our value as a social partnership is to find a consensus recommendation acceptable to both sides of industry.

Alongside the NLW increase announced today, the Commission recommended significant rises in National Minimum Wage (NMW) rates for younger workers. The 21-22 Year Old Rate will increase to £9.18, narrowing the gap with the NLW and leaving this age group on course to receive the full NLW by 2024. NMW rates for 18-20 and 16-17 year olds will increase in line with underlying wage growth, protecting earnings for young workers while recognising their higher risk of unemployment. The minimum wage for apprentices will increase by 51p, bringing it in line with the 16-17 Year Old Rate.

Rate from April 2022 Current rate (April 2021 to March 2022) Increase
National Living Wage £9.50 £8.91 6.6%
21-22 Year Old Rate £9.18 £8.36 9.8%
18-20 Year Old Rate £6.83 £6.56 4.1%
16-17 Year Old Rate £4.81 £4.62 4.1%
Apprentice Rate £4.81 £4.30 11.9%
Accommodation Offset £8.70 £8.36 4.1%

Commissioners’ advice to the Government this year covers several areas. The LPC has reviewed minimum wage rules for domestic workers and recommended that an exemption that has prevented au pairs and domestic workers from earning the minimum wage is removed. Commissioners have also examined the evidence around the NLW’s impacts on different regions of the UK and on groups of workers with protected characteristics.

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