30.10.2024

National Living Wage to increase to £12.21 in April 2025

The Government announced yesterday (29 October), its acceptance of the Low Pay Commission’s (LPC) recommendations on the rates of the National Minimum Wage (NMW), including the National Living Wage (NLW).

The rates which will apply from 1 April 2025 are as follows:

	NMW Rate	Increase (£)	Percentage increase
National Living Wage (21 and over)	£12.21	£0.77	6.7
18-20 Year Old Rate	£10.00	£1.40	16.3
16-17 Year Old Rate	£7.55	£1.15	18.0
Apprentice Rate	£7.55	£1.15	18.0
Accommodation Offset	£10.66	£0.67	6.7

The LPC’s recommendations meet the remit set by the Government. The recommended NLW rate is expected to equal two-thirds of median earnings and to have the highest real value in the history of the UK’s minimum wage. The increase in the 18-20 Year Old Rate narrows the gap between that and the NLW, in anticipation of the adult rate being extended to 18 year olds in future years.

Baroness Philippa Stroud, Chair of the LPC, said: "The Government have been clear about their ambitions for the National Minimum Wage and its importance in supporting workers’ living standards. At the same time, employers have had to deal with the adult rate rising over 20 per cent in two years, and the challenges that has created alongside other pressures to their cost base.

"It is our job to balance these considerations, ensuring the NLW provides a fair wage for the lowest-paid workers while taking account of economic factors. These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time.

"The data show some signs of employers finding it harder to adapt to minimum wage increases. The tightening of the labour market since the pandemic has unwound, but the overall picture is similar to 2019.The economy is expected to grow over the next year, although productivity growth remains subdued.

"We look forward to continuing our work next year as the detail of the Make Work Pay plan is elaborated upon. The NMW is a major part of the Government’s ambitions for the future of the labour market, and it is important that it continues to be informed by the expertise and consensus-building the LPC provides."

The LPC’s recommendations are based on extensive consultation with employers, workers, representatives of both groups and other expert bodies, as well as a series of regional visits across the UK. They reflect unanimous agreement among Commissioners, including those representing workers, employers and independent experts.

The recommended increase in the 16-17 Year Old Rate restores that rate to its original value relative to the adult minimum wage. In line with previous recommendations, the Apprentice Rate will remain equal to the 16-17 Year Old Rate.

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