This week, the government announced substantial increases to the National Living Wage and National Minimum Wage in line with the recommendations of the independent Low Pay Commission.

The new rates, which apply from April 2023, are as follows: 

  • Rate for people aged 23 and over - £10.42 per hour [a 9.7% uplift to the current rate of £9.50]
  • Rate for 21-22 year olds - £10.18 an hour [a 10.9% uplift to the current rate of £9.18]
  • Rate for 18-20 year olds - £7.49 an hour [a 9.7% uplift to the current rate of £6.83]
  • Rate for 16-17 year olds - £5.28 an hour [a 9.7% uplift to the current rate of £4.81]
  • Apprentice rate - £5.28 an hour [a 9.7% uplift to the current rate of £4.81] 
  • Accommodation offset - £9.10 [a 4.6% uplift to the current rate of £8.70]

The Low Pay Commission said that the arguments for and against making substantial increases to the NMW was 'finely balanced' due to the 'unusual' position of the economy. It believes that businesses can manage these increases because of the 'tightness of the labour market and historically high vacancy rates'. Whether that remains true over the next year or so, remains to be seen. 

The Low Pay Commission is charged by the government to reach a NMW target representing two-thirds of median earnings for all workers aged 21 and over by 2024. To do this it will need to increase the NLW to £11.08 in April 2024 and reduce the age bands for the NLW from 23 to 21 years old.    

These rates are edging (slightly) closer to those recommended by the Real Living Wage Foundation that apply to workers outside the capital city. It calculates its rates according to the cost of living, based on a basket of goods and services. In September, it announced an increase in rates to £10.90 per hour for those living outside of London, and £11.95 for those working in London.

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