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What is the National Minimum Wage?

The National Minimum Wage (NMW) applies to most workers and sets minimum hourly rates of pay. The rates are provided in regulations made by the Secretary for State with parliamentary approval, based on the recommendations of the Low Pay Commission (LPC).

NMW rates vary by age group. NMW rates vary by age group. From April 2019, the minimum wage is: 

  • £8.21 per hour for adults aged 25 and over, rising to £8.72 per hour from April 2020 (this is the “National Living Wage” rate)
  • £7.70 for 21-24 year olds, rising to £8.20 from April 2020
  • £6.15 for 18-20 year olds, rising to £6.45 from April 2020
  • £4.35 for 16-17 year olds, rising to £4.55 from April 2020
  • £3.90 for apprentices aged under 19 or in their first year of an apprenticeship, rising to £4.15 from April 2020.

How has the value of the NMW changed over time?

The value of each minimum wage rate has increased in real terms (i.e. has increased faster than prices) since the NMW was first introduced in 1999. However, in the aftermath of the 2008/09 recession, the real value of all minimum wage rates decreased. The various NMW rates are now above pre-recession levels in real terms, with the exception of the 16-17 rate, which is set to rise above pre-recession levels in April 2020.

The National Living Wage (NLW) is an NMW rate for workers aged 25 and over, introduced in April 2016. Unlike the other NMW rates, the National Living Wage has been subject to a Government target that its value must reach 60% of median earnings (the point at which half of people earn more and half earn less) by 2020. In April 2020, the National Living Wage is set to stand at around 60% of median earnings for people aged 25 and over.

How many people are paid at the NMW?

The Low Pay Commission estimates that there were 2 million workers paid at or below the minimum wage in April 2019, around 7% of all UK workers. This compares to 1.5 million jobs paid at or below the NMW in 2015, before the introduction of the National Living Wage.

Jobs paid around the minimum wage are concentrated within a small number of low-paying occupations. The Low Pay Commission estimates that nearly half (48%) of all jobs paying at or below the minimum wage are in retail, hospitality and cleaning & maintenance occupations.

How does the NMW compare to minimum wages in other countries?

The UK has a relatively high minimum wage, in terms of monetary value, compared with other OECD countries. In 2019, the UK had the seventh highest adult minimum wage out of 27 OECD countries (based on the National Living Wage rate) after taking into account differences in the cost of living.

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