The Low Pay Commission has issued an update ahead of its recommendations to the Government on next year’s National Living Wage rates, detailing how it plans to account for updates to its remit post-election.

At the end of July, the new Labour Government issued an updated remit to the Low Pay Commission, which included the following criteria:

• The Government has asked the Commission to ensure that the rate for workers aged 21 and over does not fall below two thirds of median earnings
• The Low Pay Commission has been tasked with recommending a separate rate for 18-20 year olds in 2025, with a view to removing age bands for the National Living Wage rate in the future
• The Government has asked the Commission to consider the impact of its recommended rate on business, the labour market, competitiveness, the wider economy, and the cost of living, as well as inflation trends.

In its response, the Low Pay Commission details the estimates that they are working toward ahead of recommendations at the end of October. The Commission states that ‘its central estimate is 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. 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.’

The Commission also states that it ‘would only recommend an NLW below the ‘floor’ if doing so was necessary to prevent substantial negative outcomes, such as significant job losses among low-paid workers.’

In evidence provided to the Commission earlier this year, ACS highlighted the significant contribution of convenience store colleagues to the UK economy. There are over 437,000 people working in the convenience sector in secure, local and flexible employment. Figures from ACS’ 2024 Colleague Survey show that 98% of colleagues working in the convenience sector are on permanent contracts and as a result, 83% of colleagues feel secure in their current role. The majority of colleagues are also drawn from the local community with 47% walking to work with an average commute time of just 13 minutes per day.

ACS chief executive James Lowman said: “We will continue to work with the Low Pay Commission as they gather evidence about the broad economic and labour market conditions faced by convenience workers and businesses, as well how increasing the National Living Wage and National Minimum Wage will impact convenience employees across the UK. It is essential that convenience stores can continue to provide local, secure employment that features genuine two-sided flexibility.”

The current rates of the National Living Wage are as follows:

• National Living Wage – applies to anyone aged 21 and over: £11.44 per hour
• National Minimum Wage – applies to young workers aged 18-20: £8.60 per hour
• National Minimum Wage – applies to young workers aged 16-17: £6.40 per hour

The Low Pay Commission’s full statement is available here: https://www.gov.uk/government/publications/how-the-lpc-will-respond-to-our-updated-remit/9c80b49e-70a2-4872-af97-f69a83b1f385