Katherine Heffernan | 27 Jun 2022

What’s in store for the National Living Wage in 2023?

Following a relatively modest increase of 2.2% in 2021, which sought to recognise that businesses were contending with the economic fallout from the pandemic, this April the National Living Wage (NLW) rose by 6.6% to £9.50. By comparison, median pay awards at that time were starting to edge up to 3.0% following a sustained period at 2.0%.  

You can have your say on how the NLW affects your organisation by participating in our survey, which closes on 1 July and looks at the impact of rises in the statutory floor on pay setting, differentials and opportunities for progression for the lowest paid. The current target is for the NLW to reach 67% of median earnings by 2024, by which time it will also have been extended to cover all workers aged 21 and over (down from 25 at the launch of the NLW in 2016 and 23 as of last year). This target has remained in place despite the difficult conditions many, though not all, lower-paying employers have faced over the last two years. The latest central estimate from the Low Pay Commission (LPC), which advises the Government on the level of the statutory minimum, is for the NLW to reach £10.32 in 2023 and £10.95 in 2024 (all workers aged 21+) – increases of 8.6% and 6.1% respectively.

The findings from our survey will form part of the evidence the LPC will consider when it deliberates further in the autumn over its recommendation for next year’s increase, alongside evidence including key economic indicators (not least inflation, which reached a new high of 11.7% last week) and other commissioned research. All survey participants will receive a free copy of the findings, providing useful insights at a time when the cost of living and tight labour markets are affecting decisions on pay. Individual responses will be treated in confidence, although we will share a list of contributors with the LPC. 

Latest reports from IDR

Our new report, ‘Hybrid and homeworking and implications for pay’, is published later this month and includes detailed qualitative insights from employers on the practicalities of managing such arrangements effectively and how these new working practices are impacting location allowances. It also looks at the extent of four-day-week working practices, which are becoming more widespread in part due to initiatives such as the pilot programme overseen by 4 Day Week Global.