Javid announces plans for boost to national minimum wage

The Chancellor of the Exchequer has announced plans to raise the national living wage to 66% of median earnings by 2024 rather than 60% and to reduce the age limit for the national living wage.

Speaking at the Conservative party conference in Manchester today Sajid Javid said the national living wage would rise to £10.50 an hour by 2024 rather than £9.55 as it is currently on course to do.

The national living wage, which is not the same as the voluntary and higher paid Living Wage Foundation’s living wage, is currently £8.21 an hour.

Javid also announced plans to lower the age limit at which young people can get the national living wage. Currently the national living wage only applies to people aged 25 and over. Younger workers get a lesser amount –  £7.70 for over-21s and £6.15 for over-18s.

Javid said he would reduce the age limit in two stages – lowering it to 23 from 2021 and to 21 from 2024.

Carolyn Fairbairn, the Director-General of the Confederation of British Industry, said: “Business shares the Chancellor’s ambition to end low pay. Increasing productivity is the only way to sustainable pay rises. The success of the independent Low Pay Commission has been its evidence-based approach to increasing wages without damaging job prospects. The Commission will work best if it retains the ability to judge the pace and affordability of any future wage rises.”

Kate Palmer, Associate Director of Advisory at HR experts Peninsula, said: “Perhaps the biggest news to take from the announcement is that the National Living Wage – the highest band of minimum wage available – will be extended to include anyone who is aged 21 and over. This will effectively revert the minimum wage structure to how it was before the introduction of the National Living Wage by re-applying the highest minimum wage to those aged 21 and over. While fewer age bands will make the system a little easier for employers to understand, it means a significant increase in hourly pay for some workers which some small businesses may struggle to achieve.

“Fortunately, the advance announcement of the pay increase will mean that some forward planning is possible, and budgets can be set accordingly. Despite this, the overall effect will not change; employee wages will get higher. This will be the case under either a Conservative or a Labour Government. Although structured differently, Labour leader Jeremy Corbyn has also confirmed that a pay increase for the country’s lower paid workers is one of his highest priorities.”

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