The Low Pay Commission’s 2019 recommendations complete the path originally set out in 2015.
The Low Pay Commission (LPC) today publishes its 2019 recommendations on the National Living Wage (NLW) and National Minimum Wage (NMW) and a summary of its 2019 findings, covering our analysis of the impact of the 2019 rates and the evidence for our recommendations for rates from April 2020.
The acceptance of the LPC’s recommendations means achieving the goal originally announced by the Government in 2015, of raising the NLW to 60 per cent of median earnings. The Chancellor has indicated he will set a further target of two-thirds of median earnings by 2024.
Bryan Sanderson, Chair of the Low Pay Commission, said:
“The NLW has been an ambitious long-term intervention in the labour market. The rate has increased faster than inflation, faster than average earnings and faster than most international comparators. This has raised pay for millions without costing jobs, although employers have had to make a variety of other adjustments to deal with the increases.
“Our recommendations on the NLW are conditioned on sustained economic growth, and this bar was more narrowly reached than in previous years. Nevertheless, the economy has continued to grow and the labour market has performed well overall.
“The Chancellor’s intentions for the next phase of the NLW will mean further ambitious increases. We will continue to keep a close eye on the evidence and to report to the Government on the challenges this involves.”
The LPC’s recommendations comprised:
|Rate from April 2019||Rate from April 2020||Increase|
|National Living Wage||£8.21||£8.72||6.2%|
|21-24 Year Old Rate||£7.70||£8.20||6.5%|
|18-20 Year Old Rate||£6.15||£6.45||4.9%|
|16-17 Year Old Rate||£4.35||£4.55||4.6%|
The April 2019 increase in the NLW directly raised pay for around 1.6 million workers in 2019. Overall, the number of workers paid at the rate has remained stable since 2017.
While in recent years NLW workers have done better than their counterparts paid above the rate, this year there was strong pay growth across the bottom two-fifths of the distribution. This suggests employers have taken measures to preserve pay differentials, changed their workforce structures or simply raised pay to compete with other firms.
Average weekly pay for NLW workers grew faster than for most other groups between 2018 and 2019, as these individuals typically worked more hours. This marks a change from previous years, when increases in the NLW had a weaker effect on workers’ weekly pay and therefore on living standards.
This year’s recommendations for younger workers are higher than in 2018, reflecting the strong pay growth and stable overall employment levels for these groups. This will be the final year in which the NLW will apply to workers aged 25 and over, with the age threshold coming down to 23 in 2021 and to 21 by 2024.