The National Living Wage (NLW), the statutory minimum rate of pay for all workers aged 21 and over, has risen by 4.1% today to £12.71 an hour. Workers in the 18-20 age bracket who are paid the lower rate for this group have seen a larger increase of 8.5% (to £10.85 an hour) while the rate for those aged 16-17 and apprentices under the age of 19 (or in the first year of their apprenticeship) now stands at £8.00 an hour, an increase of 6.0%.
The higher increases for younger workers are attributable to the Government’s objective of eventually extending the ‘adult’ rate to everyone aged 18 and over, eliminating what it describes as the ‘discriminatory’ 18-20 age band. This has entailed successive comparatively higher staged increases for those in this age group. However, in light of increased youth unemployment and the possible role of higher youth rates in this, the Government’s latest remit to the Low Pay Commission (LPC) gives the Commission ‘full flexibility to determine the pace and ultimate timing of [the] alignment, with priority being given to the employment prospects of younger workers’. At the same time, many larger companies already pay all staff aged over 18 their full adult rate, which in many cases is higher than the legal minimum. This is especially the case in food retail.
Looking ahead to April 2027, the new remit also maintains the target rate for the NLW at its current benchmark of two-thirds of median hourly earnings. In making its recommendations for next year’s rates, the LPC is urged to consider the condition of the labour market; the cost of living (including inflation forecasts between April 2027 and March 2028); the impact on businesses and competitiveness; and wider macroeconomic conditions. Inflation and the cost of living could have a greater impact next year, following the impact of the latest Gulf war on gas, oil and other input prices.
