The new rates for the National Living Wage and the National Minimum Wage that will apply from the 1st April 2023 were announced by the Chancellor of the Exchequer, Jeremy Hunt, in the 2022 Autumn Statement on the 17th November 2022.
National Living Wage & National Minimum Wage Increases
The 2023 National Living Wage and National Minimum Wage increases that will apply from the 1st April 2023 will be as follows:-
- For workers aged 23 and over (i.e. the National Living Wage), the rate will increase by 9.7% from £9.50 per hour to £10.42 per hour
- For workers aged 21-22 inclusive, the rate will increase by 10.9% from £9.18 per hour to £10.18 per hour
- For workers aged 18-20 inclusive, the rate will increase by 9.7% from £6.83 per hour to £7.49 per hour
- For workers aged 16-17 inclusive, the rate will increase by 9.7% from £4.81 per hour to £5.28 per hour
- The apprentice rate will increase by 9.7% from £4.81 per hour to £5.28 per hour
- The daily rate for the accommodation offset will increase by 4.6% from £8.70 to £9.10
National Living Wage: The April 2024 Target
The Government has a target to increase the National Living Wage to two thirds of median earnings by April 2024. In its projections, the Low Pay Commision estimate that the National Living Wage will need to rise to £11.08 per hour in April 2024 to hit the target, an increase of 6.3% on the rate that will apply from the 1st April 2023
Age Threshold To Be Lowered Further For National Living Wage
Back in April 2021, the age threshold for those who are paid at least the National Living Wage was lowered from those aged 25 and over to those aged 23 and over. From April 2024, the age threshold will be lowered further to those aged 21 and over.
The Real Living Wage & The London Living Wage
The Real Living Wage was last increased on the 22nd September 2022 by £1.00 per hour from £9.90 per hour to £10.90 per hour. The rate for the London Living Wage was last increased on the same date, with the rate increasing by 90p per hour from £11.05 per hour to £11.95 per hour.
Hence, the new rate for the National Living Wage of £10.42 per hour that will apply from the 1st April 2023 will be 48p per hour lower than the Real Living Wage and £1.53 per hour lower than the London Living Wage
Commenting upon the April 2023 increase in the National Living Wage, the Director of the Living Wage Foundation, Katherine Chapman, stated: “The significant rise in the National Living Wage to £10.42 is welcome news for low-paid workers struggling with rising inflation. It’s encouraging that the government is taking steps to increase the pay on the lowest incomes as prices continue to rise. However, the rates remain lower than the real Living Wage – currently £10.90 in the UK and £11.95 in London – which is based on what it actually costs to live.“
Chapman added: “There are now over 11,000 employers, committed to always paying their staff, including contractors like cleaners and security guards, the real Living Wage. Living Wage Employers provide stability and certainty to the employees who will need it most ahead of a tough winter. This helps move us towards a high-wage, high-growth economy as employees earning a decent wage are likely to be more productive and able to spend in their local economies. We encourage those organisations who can, to make the Living Wage commitment too.“
Low Pay Commission Recommendations
In setting the new rates for the National Living Wage, the Government implemented the recommendations from the Low Pay Commission in full.
The Chair of the Low Pay Commission, Bryan Sanderson, stated: “The arguments on what to do with the NLW are finely balanced. Both employers and workers are worried about rising costs. For workers, an NLW rise normally guarantees their pay rises faster than prices, protecting their living standards. In the current context this is more important than ever. But for employers, rising wages are another bill alongside their energy, raw materials and other costs that can threaten jobs or may need to be passed on through higher prices.....It is Commissioners’ strong preference to recommend real-terms increases to the rates as long as they do not present a “significant risk” to employment chances.“
