Rising living wage set to drive up employer costs

NLW & NMW

 

Businesses that employ staff on low pay will have to absorb increasing costs in the spring, following changes to the National Living Wage (NLW) and National Minimum Wage (NMW).

 

The NLW hourly rate for workers over the age of 25 is set to rise by 6.2% from 1 April 2020 - from £8.21 an hour to £8.72.

 

The recommendations were announced on 31 December 2019 by the Low Pay Commission and look set to be adopted in the Budget on 11 March 2020.

 

The new Government claims the changes will put an extra £930 a year in the pockets of NLW staff who work 35 hours a week.

 

It also remains in line with a Government pledge prior to the recent election, which promised to raise the NLW to £10.50 an hour by 2024.

 

Businesses warned that a sharp minimum pay rise would put pressure on companies and urged the Government to reduce costs from elsewhere.

 

Business groups understandably treated the announcement with caution, with some questioning how under-pressure employers will pay for it.

 

The planned increase to the NLW is four times the current rate of inflation, which currently remains at 1.5%.

 

 Age

 Hourly rate up to 31/3/2020  

 New hourly rate as of 01/04/2020

 25+ (NLW)

£8.21

£8.72

 21-24  (NMW)

£7.70

£8.20

 18 – 20 (NMW)

£6.15

£6.45

 16 – 17 (NMW)

£4.35

£4.55

 Apprentices

£3.90

£4.15