Large minimum wage increases help protect low-paid workers’ living standards

The Low Pay Commission’s (LPC) recommendations ensure the NLW continues on track to reach the government’s target of two-thirds of median earnings by 2024. The recommendations were unanimously agreed by commissioners and accepted in full by the government.

The LPC has published its letter of recommendations to the government and a summary of the evidence that informed them. The full 2022 report, which sets out the evidence in detail, will be published and laid in Parliament later this year.

The increases will support the wages and living standards of low-paid workers at a time when many are feeling increased pressure from a rising cost of living. They are recommended against a backdrop of a tight labour market where unemployment is at record lows and vacancies remain high as businesses compete to recruit and retain staff.

Bryan Sanderson, Low Pay Commission chair, said the rates include the largest increase to the NLW since its introduction in 2016 and will provide a much-needed pay increase to millions of low-paid workers across the UK, all of whom will be feeling the effects of a sharply rising cost of living.

“For a full-time worker, the increase means nearly £150 more per month,” he said.

“The tightness of the labour market and historically high vacancy rates give us confidence that the economy will be able to absorb these increases.”

Businesses also have to navigate these economically uncertain times and by ensuring we remain on the path to achieve our 2024 target, employers will have greater certainty over the forward path.

“These recommendations have the full support of the business, trade union and academic representatives who make up the Commission,” he said.

Alongside the NLW, the commission recommended significant increases in the National Minimum Wage (NMW) rates for younger workers. The 21–22-year-old Rate will increase to £10.18, narrowing the gap with the NLW and leaving this age group on course to receive the full NLW by 2024. NMW rates for 18–20 and 16–17-year-olds and apprentices will increase in line with the NLW increase of 9.7 per cent in recognition of the tight labour market and strong demand for labour in youth-friendly sectors.