Report: Low Pay Commission Report 2020

The Low Pay Commission’s 2020 annual report sets out the evidence base underpinning its recommendations on the National Living Wage (NLW) and National Minimum Wage (NMW) rates to apply from April 2021. These recommendations were accepted in full by the Government and the 2021 rates announced on Wednesday 25 November 2020.

Key findings

• Under normal circumstances the starting point for the NLW is calculating the next step on the path to the 2024 target – the ‘on-course rate’. However, due to the scale of the furlough scheme and its impact on pay and jobs, the changes in earnings do not reflect economic conditions in the standard way. As such, it has recommended rates that minimise any ‘significant risk’ to employment prospects.
• Taking this into account it has recommended an increase in the NLW to £8.91, which is 2.2% or 19p. This is lower than its best estimate of the on-course rate of £9.06, and therefore represents a significant adjustment in response to economic conditions.
• It does not recommend a change to the government’s target of reaching two-thirds of median earnings by 2024, and remains fully committed to the goal of ending low pay.