National Living Wage to rise by 9.8% to £11.44 per hour

The National Living Wage (NLW) is to increase by nearly 10% for those over the age of 21.

The government has announced that it has accepted recommendations from the Low Pay Commission that will see the NLW for those aged 21 and over rise to £11.44 from 1 April 2024. Those aged 18-20 will receive £8.60 per hour, those aged 16-17 or are apprentices will get £6.40 per hour and the accommodation offset will rise to £9.99 per hour.

When announcing the new rates, the Low Pay Commission stated that it believes that this increase will not cause significant risk to employment prospects.

Association of Convenience Stores (ACS) chief executive James Lowman warned that this rise will hurt retailers. “A National Living Wage of £11.44 from April reaches the Government’s long standing target of reaching two-thirds of median earnings by 2024. This will be tough for many local shops to afford, having struggled with a cost of doing business crisis for nearly two years now, and with wage bills the biggest expense for most retailers.”

ACS research from its National Living Wage Survey 2023 found that retailers have already reported the impact of previous NLW increases, with 69% taking lower profits, 56% having to reduce staff hours, 50% forced to reduce the amount they invest in their business and 50% automating certain processes.

The Fed’s National President Muntazir Dipoti warned that the extra cost could be the tipping point for stores that are already struggling to stay in business in the current economic climate.

He said: “As responsible employers, we want to pay our staff a fair wage for a fair day’s work. However, it should be borne in mind that many small shops are also struggling to cope with soaring costs. Unfortunately, there are hours in the day when some retailers do not generate an income of £11.44.”

Commenting on the new rates, chair of the Low Pay Commission Bryan Sanderson said: “The National Living Wage has delivered an improved standard of living to thousands of people who care for our children and elderly, work in farms and shops and at many other essential jobs. These efforts over the lifetime of the NLW mean over £9,000 p.a. more to a full-time worker without any increase in unemployment.”

Sanderson acknowledged the pressure faced by employers. “This hasn’t been easy for employers, with the economy facing a range of unprecedented challenges in recent years. The high degree of political and economic uncertainty has made assessing and forecasting the performance of the economy, and therefore our task, very difficult. It is a tribute to my fellow Commissioners that we have continued to achieve consensus.

“As every year, we heard evidence from employers across the UK about the pressures they faced. Costs in most sectors have continued to rise, and uncertainty has made it difficult to plan for and invest in the future. Small and medium-sized businesses report the greatest concerns, and firms in low-paying sectors are more worried about reduced consumer demand, costs of energy and the cost of labour than firms in other sectors.”

He added that the rises announced will help those facing food poverty. “The low-paid workers we spoke to this year painted a picture of growing hardship. Those on the lowest incomes have felt the rising cost of living most sharply. We heard accounts of foodbank usage and indebtedness as targeted support introduced last year began to fall away.

“We believe our recommendation will restore the real value of the NLW, which has been eroded through the recent cost of living crisis. Our judgement is that this increase will not cause significant risk to employment prospects.”

The Low Pay Commission has also been asked to provide a report to inform future minimum wage policy beyond 2024 and will submit its response to the Prime Minister and the Secretary of State for Business and Trade by the end of December 2023.