National Minimum Wage (NMW) rates are expected to increase as of April 2019.

Why does it matter?

The 2018 Autumn Budget included the NMW rates put forward by the Low Pay Commission (LPC). As a result, the National Living Wage (applicable for workers aged 25 and over) will increase by 4.9% from £7.83 to £8.21 with effect from April 2019. NMW rates for workers under 25 will increase above inflation and average earnings.

The NMW increases are smaller than those recommended by the LPC in last year’s report. This is due to the comparatively weaker labour market conditions for young people over the past year. However, the April 2019 increases will still be some of the highest on record.

Obviously increased NMW means higher costs of production for businesses. However, a less obvious outcome we anticipate is a likely increase in wages of more qualified workers in order to maintain wage differentials.

What action should you take?

Ensure that there is a plan in place for how best to deal with the higher costs of production.