The Low Pay Commission (LPC) has released a statement outlinging its approach to recommending National Living Wage (NLW) rates for April 2025, in line with a new remit issued by the government in July.
According to the LPC, it estimates that the NLW may need to increase to £12.10 - up by 5.8% - to maintain the “bite” at two thirds of median earnings. However, predicting this figure is challenging and the commision projects a range between £11.82 and £12.39.
The statement went on to say: “We also believe our central estimate (and the ranges around it) may continue to rise over the rest of the year because earnings growth in 2024 so far has been stronger than forecast. Our estimates have already increased from those we published in March this year for this reason. Our March central estimate was £11.89, with a range of £11.62 to £12.18.”
It also highlighted the government’s ambition to abolish the 18-20 year old rate so the NLW applies to those aged 18 and above. The remit says that the LPC should achieve this by “taking steps year by year”, so “in the interim” the LPC’s aim for 2025 is to further reduce the gap between the 18-20 rate and the NLW.
In April this year, the LPC began narrowing this gap with the largest-ever increase for the 18-20 age group’s rate. The LPC said further narrowing the gap will require larger increases for the 18-20 year old rate than for the NLW.
“Though, we are asked to consider the “effects on employment of younger workers, incentives for them to remain in training or education and the wider economy”” it added.
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