The IFS suggests that the government should postpone the upcoming rises until the crisis has ended, and that it should ask the LPC if there is potentially a case for a temporary cut to minimum wage rates to mirror the temporary increase in benefits. Minimum wage workers able to continue working would be affected negatively by this change but those in households in receipt of Universal Credit would be more than compensated by the increase to benefits, and the upcoming increase to National Insurance thresholds would reduce the extent to which minimum workers would see their take home pay fall between March and April.
The concluding statement is that the crisis strengthens the case for raising welfare benefits, which the government has already done, but weakens the case for increasing minimum wage rates.
CIPP comment
At the time of writing, the government has not made any announcements relating to NLW and NMW rates from April 2020, so the new rates should be implemented from 1 April 2020.
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The National Minimum Wage in 2020 1 April 2020
The Low Pay Commission have published their uprating report for the National Minimum Wage rates for 2020.
The new rates will be effective for pay reference periods that begin on or after the 1 April 2020.
The Government have set a new target for NLW to achieve a rate of two thirds of median earnings by 2024 however, in their report , the Low Pay Commission (LPC) acknowledge the high level of uncertainty on the current state of the economy, due to the effects of the Covid-19 outbreak. As a result they have chosen not to publish an indicative path for the future National Living Wage rates up to 2024.
The LPC are keen to hear the experiences of workers and employers alike during their consultation
Bryan Sanderson, Chair of the Low Pay Commission, said:
“Many of the nation’s key workers – in, for example, the care sector, agriculture, transport and retail – are low-paid, are continuing to work in very difficult conditions and will benefit from today’s increase. At the same time, the Government has introduced a comprehensive package of support for employers to lessen the impacts of these extraordinary circumstances. Under our new remit, the Government asks us to monitor the labour market and the impacts of the National Living Wage closely, advise on any emerging risks and - if the economic evidence warrants it – recommend that the government reviews its target or timeframe. This is what the Government refers to as the ‘emergency brake’. The ongoing Covid-19 pandemic clearly represents a very challenging set of circumstances for workers and employers alike, and will require us to review whether the emergency brake is required when we next provide our advice to the Government. This advice will be crucially dependent as always on the economic data we receive.”
Rates for pay reference periods that begin on or after 1 April 2020:
National Living wage 21-24 Year Old Rate 18-20 Year Old Rate 16-17 Year Old Rate
£8.72 £8.20 £6.45 £4.55 £4.15 £8.20
Apprentice Rate
Accommodation Offset
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The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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