National Minimum or Living Wage
1999 saw the introduction of the National Minimum Wage (NMW) in the UK and from 2016 it was renamed the National Living Wage (NLW) for workers aged 21 and over. The NMW label now only applies to ages 16-20, but the principle remains the same, i.e. that all workers, including those on an annual salary but excluding the self-employed, must by law receive at least what the government considers to be the lowest hourly rate on which to survive.
Since this amount increases every April, this plays a small part in inflation. It is one of the factors that employers take into account when deciding whether to raise the prices of their goods and services. The Low Pay Commission, which advises the government on the annual increase in NMW/NLW, seeks to cover the cost of living, so it will always recommend a rise unless the cost of all the other factors drops — most unlikely.
Currently, 6% of jobs (2 million workers) are on basic NMW/NLW. The amounts are £8.00 for ages 16-17 and apprentices, £10.85 for 18-20 and £12.71 for 21+. The equivalent annual salary for an adult working 40 hours/week is £26,438.80, compared to £7,488.00 in 1999. The sharpest rise in NMW/NLW has been under a Labour government, since raising pay levels is their policy.
(Image: Kurman Communications at Flickr.com / CC BY 2.0)