'This will work' | How the National Living Wage rise could 're-energise' the workforce

How the National Living Wage rise could 're-energise' the workforce

The National Living Wage will rise to two-thirds of average earnings, the Government has announced.

In a boost for the UK’s lowest paid, Downing Street committed to accept the Low Pay Commission’s recommendations - which will be announced in November. 

Based on the Low Pay Commission’s latest forecasts, this would see the National Living Wage increase to over £11 an hour from April 2024 and would mean the annual earnings of a full-time worker on the National Living Wage will increase by over £1,000 next year. 

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People currently aged 23 and over are eligible for the National Living Wage, with over 2 million workers on low pay set to benefit from the increase. 

The announcement, after successive rises since its introduction in July 2015, means a full-time worker on the National Living Wage will be over £9,000 better off than they would have been in 2010.  

Each year, the independent Low Pay Commission produces recommendations to the Government on National Living Wage and National Minimum Wage rates. This year it is due to make recommendations for the rates that will take effect from April 2024, based on their remit which sets a target for the National Living Wage to reach two-thirds of median earnings by 2024 for workers aged 21 and over, taking economic conditions into account.

Living wage rise could re-energise workers, recruitment expert predicts

Victoria Short, CEO of recruiter Randstad UK said: "The doom-mongers shouldn't be too cautious, too quickly. I think this will work.  

"It's worked before. Back in 2015, Germany introduced a minimum wage. The policy led to a 6.7 per cent increase in wages for workers who had previously been paid below the minimum, reducing inequality.  

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“Researchers at Nuremberg’s Institute for Employment Research and UCL found that this came without any substantial effect on either unemployment or the employment rate.”  

Short went on: "Closer to home, in 2016, George Osborne announced the minimum wage for over-25s would accelerate sharply to reach 60 per cent of median hourly pay by 2020. His decision was also linked to his determination to cut welfare spending. It successfully raised pay without causing high unemployment."

"This should help alleviate some of the problems caused by the cost of living crisis, and could re-energise a workforce that, in some cases, can’t afford to work."



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