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Six findings from the National Living Wage Review

The review of national living wages by the Low Wage Commission has helped reduce regional wage inequality and narrow the wage gap between men and women, but has led to higher incomes and measurable increases in productivity. There wasn’t.

The National Living Wage (NLW) was introduced in 2015 and aims to improve wages and productivity while reducing government spending on benefits.

but reviewA survey of what NLW achieved between 2016 and the start of the Covid-19 pandemic in 2020 found that other factors were hampering the potential positive impact on workers’ income.

In April 2020, NLW achieved its original goal of 60% of median revenue for workers aged 25 and over, but a higher goal of 66% of median revenue for all workers aged 21 and over. It is being implemented in 2024.

Brian Sanderson, chair of the Low Wage Commission, said: This review is a timely reminder of policy outcomes and their limitations.

“NLW was able to determine that it had succeeded in reducing wage inequality, and concerns about unemployment remained unresolved. However, productivity gains were elusive and to workers’ income. The impact was mitigated by other factors.

“The headwinds that businesses and workers face alike have been greater than at any point since the introduction of the NLW. Today’s report highlights the need for a balanced and flexible approach to support both. The minimum wage is important, but it’s not the only one. “

The six main findings of the review are:

Hourly wages NLW increased at twice the rate (26%) of the median hourly wage (12%) for workers aged 25 and over between 2015 and 2019. This has reduced overall hourly wage inequality within and between UK countries and regions.

Between 2015 and 2019, NLW increased job payments by up to 35%. This includes 7% of salaries paid to NLW in 2019 and 28% of which were paid higher in 2019 than would have been without NLW. Introduced.

However, the impact on employment rates was “suppressed.” Low-wage companies had lower employment growth than similar companies that paid high wages.

2. Income did not increase

Households with at least one NLW worker have higher household income than other households (31% compared to 20% between 2015/16 and 2019/20), but this includes taxes and more. It was offset by a loss of benefits on duty. Credit or universal credit. This was due to their gradual decline as incomes increased and benefit levels froze.

3.NLW did not improve productivity

National living wage reviews found no evidence that NLW increased productivity growth in the regions and industries where NLW was most prevalent.

According to LPC, productivity gains require costly investments, and some small employers may not have been able to afford it in parallel with their annual increase to NLW. Very few organizations chose to give more tasks to their staff,
We needed to increase time flexibility, tighten absentee limits, increase the pace of work, and raise performance standards.

4. NLW workers are unlikely to move employers, but wages have risen.

Workers often have higher wages when they change jobs, but the annual increase in NLW rates has made it more attractive to stay in the same job.

Each year, about 40-50% of minimum wage workers see salary increases that move them from the lower wages. NLW temporarily reduced the proportion of workers below the minimum wage in 2016, but the rate of progress returned to normal levels from 2017 to 2019.

5.NLW helped reduce inequality

NLW has reduced hourly wage inequality between UK regions and countries, with the largest increase in the minimum wage region on average.

Throughout the UK, salary growth was the highest in the 10th percentile, driven by an increase in NLW. These increases ranged from 17% in London to 22.5% in Northern Ireland.

6. Gender and ethnic wage gaps narrow among low-wage workers

Women are more likely to be paid NLW than men, so women can benefit more than men. The gender pay gap at the 20th percentile decreased from 9% in the first quarter of 2016 to 7% in the first quarter of 2020.

In the first quarter of 2020, the hourly wage range for the 20th percentile by ethnicity was 8.7%, compared to 15.1% in the first quarter of 2016. However, while some groups are closing the gap, others are not.

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Six findings from the National Living Wage Review

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