The National Living Wage (NLW), the statutory minimum hourly pay rate for all workers aged 23 and over, rose by 92p or 9.7% to £10.42 on 1 April. The same level of increase has been applied to the apprentice rate (informally aligned to the 16- to 17-year-old rate since April 2022) and all National Minimum Wage (NMW) age bands with the exception of that for 21- and 22-year-olds, which is rising by 10.9% to £10.18. The higher increase for this age group is in part intended to moderate the impact on employers of the expansion of the adult NLW rate to all workers aged 21 and over from next year.

While the increase to the main rate is higher than the median pay rise monitored by IDR recently, it is slightly lower than the 10.1% increase in the voluntary living wage to £10.90 outside of London (£11.95 in London) set by the Living Wage Foundation. Accredited employers have until mid-May to comply with this uplift. 

Next year (2024) will mark the end of the Low Pay Commission (LPC)’s current remit, under which the NLW should reach a target rate of two-thirds of median earnings. In April 2024, the LPC anticipates that the on-course NLW will be between £10.90 and £11.43, with a central estimate of £11.16 – setting the statutory minimum at this latter figure would entail an increase of 7.1%. The LPC is currently conducting a consultation with the intention of both looking at the impact of the latest increase in the NLW and also gathering evidence to inform the Government’s decisions on policy options for the minimum wage beyond 2024. Particular focus areas for this include:

• the purpose of the NMW and NLW and the role of the LPC
• whether a separate minimum wage rate for apprentices is necessary
• the range of policy options for the minimum wage and how these might work
• the potential effects of further minimum wage increases and the risks the LPC should consider
• the evidence that should support future policy decisions.

How easily will employers in low-paying sectors be able to accommodate the latest NLW/NMW increases – or indeed improve on them – given that cost pressures are greater than in previous years? Our new poll aims to understand how the latest uprating will affect employers across the UK. If the NLW or voluntary living wage inform pay setting at your organisation, please take part – all respondents will receive a copy of the survey findings. 

Meanwhile our latest research into Pay and Conditions in Retail found that, despite the comparatively high uplift in the statutory minimum in 2022, many employers in the sector had managed to create or maintain a differential with the NLW, such that the median minimum established rate for retail assistants aged 23 and over, at £9.71, exceeded the prevailing statutory floor for the first time since the NLW’s inception in 2016. Almost three-quarters (72%) of the retailers in this year’s sample paid a minimum hourly rate for established staff that was above the NLW. Adopting a similar approach this year could offer employers in this and similar sectors an advantage in tackling the labour market pressures many currently face. At the same time, the new higher rate might be an issue for smaller employers.