The government has today published the Low Pay Commission’s remit for the rates of the National Minimum Wage (NMW) and National Living Wage (NLW) that will apply from April 2026.
On changes to the NLW, the new remit says: “The Government is committed to raising the living standards of working people and this is the key focus of the Government’s Growth Mission.
The Low Pay Commission’s recommendations are not purely formulaic. The remit requires the Government to consider economic conditions and balance a “multitude of factors” to make recommendations that “deliver for workers and businesses alike”. Therefore, these figures should be taken as indicative only, it says.
“The Government asks the Low Pay Commission to ensure that the NLW rate does not drop below two-thirds of UK median earnings for workers in the NLW population, a recognised measure of low hourly pay. The Low Pay Commission should take into account the cost of living, inflation forecasts between April 2026 and April 2027, the impact on the labour market, business and competitiveness, and carefully consider wider macroeconomic conditions.
In terms of estimates, its central estimate is that an NLW increase to £12.71 (4.1%) would ensure the NLW does not fall below two-thirds of median earnings as hoped. However, predicting this figure is challenging, so it projects a range around our central estimate which runs from £12.55 to £12.86.
If wage growth continues to outperform forecasts then our central estimate (and the range around it) may continue to rise over the rest of the year.”
The update continues: “If wage growth continues to outperform forecasts then our central estimate (and the range around it) may continue to rise over the rest of the year. The estimates published here assume that year-on-year wage growth was 5.1% in May 2025, and that year-ended wage growth is forecast to be 3.9% and 3% in 2025 Q4 and 2026 Q4 respectively.”
The update adds that these figures are “indicative only,” and says that by the end of October this year it will provide advice to the Government on the NLW and NMW rates to come into effect in April 2026.
No comments yet