The National Living Wage (NLW), the statutory minimum wage for all workers aged 23 and over, will rise by 59p or 6.6% to £9.50 an hour from 1 April 2022, it has been confirmed in today’s Budget. This follows a much smaller increase of 2.2% this year, when employers in many low-paying sectors were contending with the economic consequences of the pandemic, and exceeds the most recent projection of £9.42 (with a range of 7 pence above or below this figure) published by the Low Pay Commission in April. While some of the employers that were hardest hit by COVID, or who depend on government funding for much of their income, may dispute the affordability of the new rate, this higher increase should help move the NLW back on course to reach the target of two-thirds of median earnings by 2024 (currently estimated at £10.33).
Minimum rates for many of those aged below 23 are set to increase by higher amounts still: the National Minimum Wage (NMW) for 21- and 22-year-olds will rise by 9.8% (72p), presumably as an initial step towards the eventual expansion of the NLW to all those aged 21 and over. And the apprentice rate, which applies to apprentices aged 16 to 18, as well as older apprentices in their first year of training, will go up by almost 12%, to £4.81 – equivalent to the new NMW for 16- and 17-year-olds. Set against these rises, 4.1% increases in minimum rates for workers aged 16 to 17 and 18 to 20 appear somewhat modest but are nonetheless some way ahead of median pay awards across the wider economy, which our monitoring has been tracking at 2.0% for much of the past year.