National Minimum Wage Update
National Minimum Wage increases from October 2016
The National Minimum Wage rates that will apply from 1 October 2016 are as follows.
- The rate for workers aged 25 and over (the National Living Wage) will remain at its initial rate of £7.20 per hour.
- The rate for 21–25 year old will increase from £6.70 to £6.95 per hour.
- The rate for 18–20 year olds will increase from £5.30 to £5.55 per hour.
- The rate for 16–17 year olds will increase from £3.87 to £4.00 per hour.
- The apprentice rate will increase from £3.30 to £3.40 per hour.
The accommodation offset will increase from £5.35 to £6.00 per day.
Consultation on National Minimum Wage rates (including National Living Wage) to apply from April 2017
This consultation asks questions about the impact of the different minimum wage rates. It also seeks views on how much the wage rates should increase next April.
There are now five minimum wage rates: the new National Living Wage (NLW) and four rates of National Minimum Wage (NMW) applying to workers up to the age of 25.
The NLW was introduced in April 2016. The other NMW rates normally increase in October as outlined above. From April 2017, the annual increase in rates will be aligned to run on the same calendar.
The NLW is different from the other categories of NMW because the Low Pay Commission (LPC) has been given different criteria to consider when setting the NLW.
For rates affecting those aged under 25 and apprentices, the LPC makes its recommendations on the basis of “helping as many low-paid workers as possible without damaging their employment prospects”.
For the new NLW, the LPC’s recommendations are subject to a target of 60% of median earnings by 2020. This target is “subject to sustained economic growth” but includes tolerance of some job losses. The projected rate of the NLW for 2020 has already gone down from £9.35 to £9.02 due to lower anticipated increases in average pay.
This consultation asks for feedback on the effect of the introductory rate of the NLW (£7.20) on workers and for views on the target rate of £7.60 for April 2017. It also asks for responses to the LPC’s approach to making recommendations for the NLW.
For the other minimum wage rates the consultation seeks evidence on the impact of the rates on younger workers’ employment prospects. It also asks for views on how to adjust the rates in April 2017, given that the increases will come just six months after the October 2016 increases.