The Low Pay Commission has recommended to the government that it moves towards expanding the national living wage (NLW) to anyone over-18.
Currently, employers must pay the statutory minimum NLW to workers aged 21 and over. From 1 April 2024, this will increase to £11.44, a 9.8% increase.
This year is also the first year the NLW will apply to those aged 21 and 22, as it had previously applied only to employees over 23.
The LPC’s role is to advise government on how to set minimum wage levels, and in 2016 it set the target of this rate reaching two-thirds of median hourly earnings. Its next increase is expected to meet this target.
Its report – The National Minimum Wage Beyond 2024 – considers the evidence for reducing the age of eligibility for the NLW, which would reduce the gap between adult and youth rates of pay.
National living wage
This would also improve the treatment of apprentices, whose low pay rates have been the subject of harsh criticism.
According to the LPC, the national minimum wage and NLW policies have “delivered substantial improvements in hourly pay for low-paid workers”.
“While real average hourly pay has barely changed since 2015, it has grown by 20 per cent for workers in the bottom tenth of hourly pay,” the report says.
“The NLW is important for low-income working households, where the highest earner is often an NLW worker.”
In terms of where the NLW goes once it has reached its target, the LPC argues that the government either revises its target, or returns to a “principle-based approach” – this approach would respond to economic conditions but ensure employers maintain a level playing field, it suggests.
However, it does warn that the risks of lowering the NLW age of eligibility to 18 would be greater than lowering it to 21.
“Both the level of increase required, and the share of jobs affected are higher. The current tight labour market conditions may not persist,” it adds.
“This change should therefore be managed carefully, with time allowed for full evaluation of each step.”
Baroness Philippa Stroud, chair of the LPC, said achieving the two-thirds target is a “significant milestone”.
“The target has boosted the incomes of low-paid workers in especially turbulent times. And whilst it has posed real challenges for employers, in already difficult circumstances, but the evidence suggests the increases to date have been implemented steadily and carefully so as not to damage employment opportunities,” she said.
“In choosing the National Minimum Wage’s future direction, we stress the importance of clarity over the aims of the policy; and preserving the consensus-based social partnership model which ensures both worker and employer voices are heard.
“There are real opportunities in the next phase of minimum wage policy, to make advances for workers young and old. Whatever decisions are made will always need to be backed by careful attention to the economic context and a keen sense of the risks faced by employers. The Low Pay Commission’s model remains the best one for delivering these changes.”
Responding to the report, TUC general secretary Paul Nowak said: “Too many young workers are being left hugely out of pocket because of outdated youth rates.
“And the gap between these youth rates and the rate for those over 21 has widened in recent years.
“Young people are being hammered by the cost-of-living crisis – and like everyone else, they need more money in their pockets now.
“The Labour opposition have already committed to ensuring that discriminatory age bands are removed – it’s welcome to hear that the Low Pay Commission agrees.”
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