April 8th 2024

By Ailsa Colquhoun

Low Pay Commission calls for funding to support further wage increases

Further increases in the National Living Wage (NLW) without commensurate increases in funding are unsustainable, the Low Pay Commission has warned.

In a report to Government, the Commission says that future decisions on wage rates should be based on evidence and the voice of workers and employers. The LPC states: “[The NLW] is not a panacea for all the problems faced by low-paid workers, or for the wider issues facing the UK economy.”

In a report the LPC makes six recommendations to Government including to strengthen workers’ rights, for example, to switch to a contract that reflects a worker’s regular working pattern, that gives reasonable notice of work schedules and offers a right to compensation if a shift is cancelled or curtailed at short notice.

The rationale is that to pay for the NLW, some employers, particularly small firms, are cutting investment and simply asking staff to work harder. “Low-paid workers tell us their jobs are becoming more intense,” says the LPC. Others have accepted lower profits or passed the costs on in higher prices.

It also notes that NLW increases have led to higher pay for those paid above the minimum to maintain pay differentials. This ‘spillover’ effect raises the overall cost of minimum wage increases and “is a worry for employers,” it says.

The report notes that the UK NLW has become one of the highest minimum wages in the world. In 2024 the NLW is expected to reach the Government’s target of two-thirds of median hourly earnings, for workers aged 21 and over.   

Further information on the UK NLW is available in The Low Pay Commission report,  The National Minimum Wage in 2024