Latest news with #Low Pay Commission
Yahoo
5 days ago
- Business
- Yahoo
National living wage to increase in 2026 - here's why some think it should be even higher
The government has been told to increase the national living wage next year - but many campaigners think it should be a lot higher. The national living wage should increase by as much as 65p next year to help people with the rising cost of living, a government body has recommended. The Low Pay Commission said the amount - an obligatory minimum wage payable to workers aged 21 and over - should be bumped to an average of £12.71 per hour, rising from the £12.21 per hour set in April. Depending on economic condition, it could reach as high as £12.86. As the body works to recommend a wage that keeps up with the ever-increasing cost of living, some organisations want to see the hourly wage increase higher to make sure it isn't outstripped by skyrocketing prices and rising rents. Here's what's going on with the rates at the moment, and what that means for you. What is the national living wage set at currently? As the table below shows, the national living wage is set at different rates according to a person's age and employment status. Apprentices under the age of 18 are paid just £7.55 while they are in training, according to this year's rate. The national minimum wage (for 18-20-year-olds) is set at £10, rising to £12.21 for those aged 21 and over. With this in mind, the Low Pay Commission also consults employers, trade unions and workers on narrowing the gap between the national living wage and the minimum wage rate for 18 to 20-year-olds. Usdaw, a union representing retail and distribution workers, said it "welcomes the Government's commitment to removing discriminatory age bands." "This is an issue Usdaw has campaigned on for a number of years and the updated remit will help to put an end to rip-off youth rates to deliver a single national minimum wage for all adults," the union's general secretary Joanne Thomas told Yahoo News. Should the national living wage be higher? One of the jobs of the Low Pay Commission is to suggest a wage that factors in economic and political factors - and not just the cost of living. While the Labour government has said boosting wages is a priority, Keir Starmer and the cabinet have reiterated their modest spending proposals while they fight a growing deficit and improve the UK's economic outlook. Introducing a minimum wage protects vulnerable workers from being exploited, but economists generally caution against setting a minimum wage too high because economic models predict that doing so could lead to higher unemployment. If a firm does not believe paying someone a certain wage is proportionate to the role, they may not make any additional recruits, or make redundancies. Nonetheless, some organisations think that - all things considered - the national living wage should be set a lot higher. Usdaw, which represents hundreds of thousands of workers who are paid an hourly rate, thinks a £15 per hour minimum is representative, no matter what age the worker is. This is because many low-paid workers among Usdaw's membership currently earn wages that do not reflect their contribution or provide a decent standard of living. The union's general secretary told Yahoo News: "We continue to engage with the Low Pay Commission to recommend as high an increase as possible with a goal of moving towards a rate of £15 for all workers. 'We very much welcome the steps being taken so far by government to tackle low pay and deliver a genuine living wage for working people. "Usdaw has consistently campaigned for significant increases in the national minimum wage, and it is great to see the progress already made on this issue under a Labour government." What is the real living wage? The Low Pay Commission's recommendation of a national living wage of £12.71 per hour next year would outpace the current "real" living wage" outside of London. But how does the real living wage differ from the one set by the government? While the national living wage and the national minimum wage are legally binding, the real living wage is a voluntary pay rate set by the Living Wage Foundation, independently calculated based on what it says is the actual cost of living. Whereas the Low Pay Commission weighs up the cost of living alongside political and economic interests, the real living wage takes into account factors like universal uptake, the average cost of a food shop, council tax, housing costs and childcare costs. It is currently set at £12.60 outside of London, and £13.85 in London. A total of 16,000 employers paying the real living wage are currently accredited by the Living Wage Foundation, like Sunderland City Council and the National Theatre. In an area where child poverty is significantly higher than the national average — standing at 39.1% — the Leader of Sunderland City Council, Councillor Michael Mordey, said "becoming an accredited real Living Wage employer is simply the right thing to do". The council, which has paid the wage for the last 11 years to its staff, also encourages contractors to pay the real living wage to its hires. Others like sports and leisure business Levy UK cited the moral and economic case for introducing the wage to help employees during inflation and cost-of-living pressures. They also mentioned the cash boost improving staff morale, motivation, and retention. However, not every sign-up has been a roaring success. While several employers introduced the higher wage in response to the cost-of-living crisis, a number of employers have also cited it as a reason to end it. Outsourcing company Capita announced in 2024 it would no longer be paying the wage "following its second significant annual increase" of 10%, which raised the recommended rate outside of London from £10.90 to £12 per hour. The move sparked protests at the company's Lancashire office, with CWU regional secretary Carl Webb calling the decision "an absolute disgrace". Beer giants BrewDog also sparked backlash when it withdrew from the scheme in the same year, with the company justifying it as a necessary step to return to profitability following a £24 million operating loss in 2023, despite a revenue increase to £321 million. The company has been dealing with some financial setbacks, shutting ten sites including in Leeds, Oxford, Sheffield and York in July, citing "rising costs, increased regulation, and economic pressures".
The Independent
05-08-2025
- Business
- The Independent
National living wage likely to rise to £12.71 next year, advisory body estimates
The national living wage could rise by as much as 65p an hour next year, an advisory body has estimated, as the terms of its annual review of wage rates were published. Ministers are determined to deliver 'a genuine living wage', according to the Low Pay Commission's (LPC) latest remit for increasing the so-called national living wage – the UK minimum wage for workers aged 21 and older. At the moment, the national living wage is £12.21 an hour. The LPC estimates that this will need to increase to £12.71 in 2026 to not fall below two-thirds of median earnings: the threshold which the Government expects it to stay above. But the LPC acknowledged the national living wage could rise to as much as £12.86 an hour, or as little as £12.55 an hour, depending on changing economic conditions. Founded in 1997, the advisory body provides recommendations to ministers each autumn regarding how it believes the minimum wage should be changed. The Government ultimately sets minimum wage rates for the following April after this advice. A letter from Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds said the committee must take into account the cost of living as it reviews the national living wage. The two senior ministers insisted the Government was 'committed to ensuring that the minimum wage is a genuine living wage'. They added: 'We continue to recognise that our ambition should be backed by evidence, and that the minimum wage rate should be consistent with delivering inclusive growth for working people and businesses alike. 'We are therefore asking the LPC to recommend a national living wage rate that is at least two-thirds of UK median earnings for workers aged 21 and over, to apply from next April, which takes into account the cost of living, effects on employment and developments in the wider economy.' Elsewhere, the Government is pushing forward with plans to end 'discriminatory' age banding for the minimum wage, and has extended the LPC's remit to examine this. It said the LPC will consult with employers, trade unions and workers on narrowing the gap between the national living wage and the minimum wage rate for 18 to 20-year-olds, which is currently £10. There is also a minimum wage for those aged under 18, and apprentices, of £7.55. The LPC will report back in October with advice to the Government on how much the minimum wage should rise by in 2026. The Resolution Foundation, a think tank which works to improve living standards, suggested the Government was using 'ambitious language' on increasing the minimum wage, but in reality was adopting a cautious approach. Nye Cominetti, principal economist at the think tank, said: 'Despite the Government's ambitious language around 'delivering a genuine living wage', the new remit for the Low Pay Commission represents a steady-as-she-goes approach to the adult rate, after faster increases in the years preceding 2024. 'This caution is warranted given worrying labour market data, which is thanks in part to the Government's increase in employer national insurance contributions in April.'
