Minimum wage rates announced

The government has announced a 6.2% increase in the National Living Wage (NLW), which applies to workers aged 25 and over. From 1 April 2020, the NLW will rise from the current rate of £8.21 to £8.72 an hour, in the largest rise since it was introduced two decades ago.

Workers aged under 25 earning the National Minimum Wage (NMW) will also see increases of between 4.6% and 6.5%, depending on their age.

The Chair of the Low Pay Commission, Bryan Sanderson, said that the NLW has been an ambitious long-term intervention in the labour market and that the increase has raised pay for millions without costing jobs.

The government has confirmed that the new rate will start on 1 April 2020 and will result in an increase of £930 annually for 2.8 million full-time workers earning the NLW.

A review published on the gov.uk website last November which was undertaken by a leading expert, Professor Arindrajit Dube, into the evidence on minimum wages backed the Chancellor’s pledge for the higher NLW.

It concluded that minimum wages in a range of countries have had a negligible or zero effect on jobs, but significantly increased the earnings of the lowest-paid.

Professor Arindrajit Dube said:

Based on the overall evidence—with a special emphasis on the recent, high quality, evaluations of the National Living Wage and other more ambitious policies internationally — my report concludes that that there is room for exploring a higher NLW in the UK up to two-thirds of the median wage. It will also be important to empirically evaluate and recalibrate any such ambitious policy based on new evidence down the road.’

At the time of publication of the review, Chancellor of the Exchequer, Sajid Javid, said:

The evidence is clear that our approach is the right one. We will end low pay by putting the National Living Wage on a path to increase to £10.50 over the next five years.

I thank Professor Dube for his important work and recommendations.’

The proportion of low paid jobs is at its lowest since records began in 1997.

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