The Low Pay Commission (LPC) has published how they will approach their recommendation for new National Minimum Wage rates (NMW) and National Living Wage (NLW) rates for April 2025.
In summary:
- The NLW increase in 2025 should take account of the cost of living and expected inflation up to March 2026 and not fall below two-thirds of median hourly earnings. These act as a ‘floor’ to our recommendations.
- The remit also says how important it is to “boost low earnings”. So, there is scope to recommend increases above the ‘floor’ if the economic evidence supports this, i.e. taking into account the impacts on business, competitiveness, the economy and wider labour market.
- We would only recommend an NLW below the ‘floor’ if this was necessary to avoid substantial negative outcomes, such as significant job losses among low-paid workers.
- The Government’s ambition is to abolish the 18–20 Year Old Rate so the NLW applies to those aged 18 and above. The remit says we should achieve this by “taking steps year by year”, so “in the interim” our aim for 2025 is to further reduce the gap between the 18-20 rate and the NLW.
More information can be found here.
The Low Pay Commission is the independent public body that advises the government each year on the National Minimum Wage (NMW) and the National Living Wage (NLW). In July 2024 the government issued a new remit for the Low Pay Commission, this will apply to the new rates that will come into effect in April 2025.
The Commission will continue to gather evidence and will submit their recommendations to the government at the end of October 2024.
If stakeholders have questions or thoughts on thr new remit – particularly on how they should take the cost of living into account, they should contact them at: [email protected].
Read our response to The Low Pay Commission’s 2024 consultation which estimated that the National Living Wage would need to increase to £11.89 per hour from April 2025.
