The Low Pay Commission (LPC) published a statement outlining its approach to recommending National Living Wage (NLW) rates for April 2025, in line with its new remit, updated by the government in July.

You can read the full statement here, and its key points are below:

  • The NLW increase in 2025 should take account of the cost of living and expected inflation up to March 2026 and not fall below two-thirds of median hourly earnings. These act as a ‘floor’ to our recommendations.
  • The remit also says how important it is to “boost low earnings”. So, there is scope to recommend increases above the ‘floor’ if the economic evidence supports this, i.e. taking into account the impacts on business, competitiveness, the economy and wider labour market.
  • We would only recommend an NLW below the ‘floor’ if this was necessary to avoid substantial negative outcomes, such as significant job losses among low-paid workers.
  • The Government’s ambition is to abolish the 18–20 Year Old Rate so the NLW applies to those aged 18 and above. The remit says we should achieve this by “taking steps year by year”, so “in the interim” our aim for 2025 is to further reduce the gap between the 18-20 rate and the NLW.

In the statement, LPC estimates that an NLW increase to £12.10 (5.8 per cent) would be required to maintain the bite (the ratio of the NLW to median hourly pay) at two thirds of median earnings.

And it goes on to say “However, predicting this figure is challenging, so we project a range around our central estimate which runs from £11.82 to £12.39. 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.”

Upcoming roundtable with the Low Pay Commission

In response to LPC’s new remit and its impact on the retail sector, on 24 September, the BRC will host an exclusive roundtable for retail members and three commissioners from the LPC, providing retailers with an opportunity to directly discuss the impact of these changes for the sector.

The roundtable is taking place on 24 September (1pm-2pm, MS Teams), and you can follow this link to register.

For reflections and further support on this, please contact luiza.gomes@brc.org.uk