Two options for expanding the National Living Wage (NLW) to include 18–20-year-olds have been put forward for consulltation by the Low Pay Commission (LPC).
The independent body, which is part of the Department for Business and Trade, advises government on minimum wage policy, and suggests either basing the end of the 18–20-year-old rate on subjects’ age, or increasing all ages together gradually over time.
The NLW currently stands at £12.21 per hour for those aged 21 and over, and £10 per hour for those aged 18-20.
The first option (a) is to include younger people in the National Living Wage one age at a time, first including 20-year-olds, then 19-year-olds, then 18-year-olds.
The second option (b) would see all 18-20-year-olds receive gradual increases together, bringing their minimum wage rates in-line with the main rate over a number of years.
The Low Pay Commission says that option (a) would “lead to one-off large increases in the wage floor for each age cohort as they move onto the NLW”, while option (b) would “require smaller (but still significant) increases spread over a number of years”.
Regardless of which option is chosen, ending the lower minimum wage rate for 18-20-year-olds will reduce median hourly pay for the overall population on the National Living Wage, as more people would be included in this rate. Because the NLW is currently connected to median hourly pay, if this is unchanged, bringing 18-20-year-olds into the ‘pool’ of those being paid NLW could see the proportionally lower increases in the wage over time. Under-18s and apprentices (who both currently get a rate of £7.55 per hour) are not due to be affected by the changes.
The Association of Convenience Stores is to gather evidence from retailers on this topic as part of its Employment Survey, sharing these findings with the LPC later this year.
