The announcement in the Autumn Statement that the statutory National Minimum Wage (also called the National Living Wage) for those aged 21 and over is to increase to £11.44 from April 2024 is positive news for low-paid workers.
It represents a big above inflation jump in earnings from £10.42 (+9.8%) for those aged 23+, and from £10.18 (+12.4%) for those aged 21-22 (who will be paid the NLW for the first time). It is significant that the Low Pay Commission, which recommends rates, expects its recommendation of £11.44 to meet the Government’s target of two-thirds of median earnings for those aged 21 and over by 2024. Lower rates apply to workers aged 20 and under.
Moreover, £11.44 is close to the voluntary Real Living Wage rate of £12 (outside London), but still some way behind the RLW rate of £13.15 for workers in London.
While the NMW/NLW is compulsory and calculated by the Low Pay Commission at levels assessed as not adversely affecting employment or the economy, the RLW is voluntary for employers and is calculated against cost of living indicators (a household basket of goods and services) based on what people need to live.
Importantly, however, wages are only one part of the cost of living conundrum. It is arguable that minimum and living wages are insufficient as a stand-alone policy measure to address in work poverty, protect living standards and to provide for life’s essentials. Social policies are required as part of a new social contract encompassing affordable public housing supply, affordable utilities and other foundational cost of living essentials, preferably through public or cooperative ownership models. Privatised provision of essentials like housing, utilities, childcare, and transport has been associated with rising costs, lack of investment, and profits often being funnelled to shareholders. This has contributed to a crisis of liveability in the everyday economy for many households, especially those experiencing in work poverty. This is exacerbated by the crumbling of all three pillars of liveability: disposable and residual income, essential services and social infrastructure.
