Increase to minimum wage from April 2021

The Government has announced that from April 2021 the National Living Wage (NLW) will increase by 2.2% from £8.72 to £8.91. It has also been confirmed that for the first time this will be extended to 23 and 24-year olds. For all employers under the age of 23, commissioners acknowledged the risks to youth employment given the current economic situation, therefore a small increase has been recommended.

As a result of the national living wage increasing, low-paid workers will see a broad rise in income. This is in accordance to the predicted wage growth; as well as ahead of projected increases in prices. Furthermore low-paid workers’ living standards will continue to be projected. In addition to this commissioner’s do not believe the increase presents any risks to employment prospects

The LPC’s recommendations comprised:

 

Hourly Rate from April 2020  Hourly Rate from April 2021                   Increase

National Living Wage             £8.72                                       £8.91                             2.2%

21-22 Year Old Rate              £8.20                                      £8.36                             2.0%

18-20 Year Old Rate              £6.45                                       £6.56                             1.7%

16-17 Year Old Rate              £4.55                                        £4.62                             1.5%

Apprentice Rate                      £4.15                                       £4.30                             3.6%

Accommodation Offset           £8.20                                       £8.36                             2.0%

 

Although there are many uncertainties over the long-term economic outlook, low pay commissioners (LPC) remain dedicated to the Government’s goal of ending low play. With this in mind, they have not recommended any changes to the Government’s plan for the Nation Living Wage to reach two-thirds of median earning by 2024. The LPC report is used as a guide for the National Living Wage, however due to the effects of furloughing on pay data limit its accuracy this year.

The LPC submitted their recommendations on October 30th, this was before the second national lockdown restrictions in England as well as the extension of the Coronavirus Job Retention Scheme.

Since 1992, D E Ball & Co Limited has been an independent business advisory service based in Telford, Shropshire. With their advisors working with businesses in the agriculture, services, construction and retailer sectors, they have a broad span of knowledge to offer. To see find out more about D E Ball: https://www.deball.co.uk/

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