The Low Pay Commission has launched a consultation on next year’s national living wage rates, after the government confirmed it intended to “maintain the bite” at two-thirds of median earnings.
It comes as employers across the country implemented the new NLW this week, which rose by 9.8% from £10.42 to £11.44 per hour – the largest ever cash increase to the minimum wage.
The age threshold for the NLW has also been lowered to 21 and over. Previously, it was set at 23 and over.
With the latest increase meeting the government’s long-standing target to reach two-thirds of median earnings, it has confirmed it intends to maintain that mark in relation to NLW rates in 2025 and has asked the LPC to make recommendations on that basis, without any further revisions to the age threshold.
The LPC estimates that the rate required to meet this aim is within the range of £11.61 and £12.18, with a central estimate of £11.89.
It will now start gathering evidence from businesses and consumers on the affordability and effects of that potential increase, as well as how the latest minimum wage rates are affecting them, including in profits, productivity, and recruitment.
This is so the LPC can “closely monitor developments in the labour market and advise on emerging risks” before making its recommendation to government on what the new rates should be for 2025 by October.
The government has also asked the independent body to advise on rates for younger workers, which this week rose to £8.60 an hour from £7.49 for 18 to 20-year-olds. Apprentices received an hourly pay rise of over 20%, going from £5.28 to £6.40.
The LPC’s remit in this area is to “raise rates as high as possible without damaging the employment prospects of the affected groups”.
In light of the consultation, the Association of Convenience Stores has urged the LPC to have “more discretion” over wage recommendations to account for economic shocks, changes in the labour market and business confidence.
“We welcome ongoing dialogue with the Low Pay Commission and government on how wage rates should be set in the future, as these decisions directly impact wage budgets for convenience retailers,” said ACS CEO James Lowman.
“Our preference is the LPC to have more discretion and flexibility over setting wage rates to account for economic shocks, changes in the labour market and business confidence.
“The convenience sector offers local, secure and flexible work that benefits employees and retailers. We want to see more done to promote the sort of good work we offer in our industry, but we must ensure that further regulation as suggested by the LPC does not inadvertently damage genuinely flexible employment opportunities with responsible employers.”
The trade body said the convenience sector was a “significant local employer”, providing jobs for over 437,000 people across the UK. Figures from the 2023 ACS Local Shop Report showed that 95% of colleagues in convenience are employed on a permanent contract, with 84% reporting that they feel very or somewhat secure in their jobs.
The ACS said it would be engaging with the Low Pay Commission throughout its evidence gathering process.
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