On October 2, 2023, following recommendations from the previous March from the Low Pay Commission — an independent public body responsible for advising the government on national minimum wage and national living wage rates — the chancellor of the exchequer announced the largest increase in the national living wage in the United Kingdom (U.K.) in more than a decade. The national living wage will be increased to two-thirds of the average earnings for workers age 21 and over, taking economic conditions into account, with the aim of reaching a new target of two-thirds of median earnings. The increase amounts to over 1 pound sterling (£) an hour (about US$1.27), from £10.42 to £11.44 (about US$13.21 to $14.50) in April 1, 2024, or more than £1,800 (about US$2,281) annually for full-time workers.
The significant increase has been attributed to “the strength of pay growth across the economy, which is forecast to continue into next year,” along with the aim of “restor[ing] the real value of the N[ational] L[iving] W[age], which has been eroded through the recent cost of living crisis.” To determine the recommended increase, the Low Pay Commission considered the targets to be reached for the national living wage, the conditions of the general economy and the labor market, data on current wage levels, and future forecasts for these items.
In addition to the increase in pay, the age threshold for eligibility for the national living wage will be reduced from 23 years old to 21 years old, which results in a wage increase of almost £2,300 (about US$2,915) for 21- and 22-year-olds working full time. The national minimum wage will also be increased for 18- to 20-year-olds by £1.11 (about US$1.41) to £8.60 per hour (about US$10.90), and the minimum hourly wage for apprentices will increase by over 20% from £5.28 an hour to £6.40 an hour (about US$6.69 to $13.81). The Department for Business and Trade estimates that these increases will impact 2.7 million workers.
The National Minimum Wage Act 1998 introduced the first minimum wage across the U.K., and it is a criminal offense to not pay a worker the national minimum wage or national living wage, punishable by an unlimited fine. The national living wage was introduced in 2016, with the aim of moving the country from “a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society.” The national living wage had an initial target of reaching 60% of median earnings by 2020, which was met in October 2020. In 2019, a new target was set to reach two-thirds of median earnings by 2024. Meeting the target would end “low pay” according to the definition provided by the Office of National Statistics.
Clare Feikert-Ahalt, Law Library of Congress
January 16, 2024
Read more Global Legal Monitor articles.