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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 2020 the minimum wage is: 

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

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.

The NMW since April 2020

Since hitting its intended target of 60% of median earnings in April 2020, the LPC has been given a new remit by the Government. This asks them to recommend the rate to apply from April 2021 following a path that reaches two-thirds of median earnings by 2024, taking economic conditions into account.

In line with recommendations made to the Government last August, from April 2021 the NLW will apply to workers aged 23 and over, and by 2024 it will apply to workers aged 21 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 were NMW workers affected by the coronavirus pandemic?

More than 800,000 minimum wage workers worked in sectors shut down by the coronavirus pandemic; a rate of 18% compared to 5% of all other jobs. Workers in low-pay occupations were more likely to be furloughed than workers in other sectors.

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 eighth highest adult minimum wage out of 25 OECD countries (based on the National Living Wage rate) after taking into account differences in the cost of living.


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