The Government s NATIONAL LIVING WAGE: …

1 The Government s NATIONAL LIVING wage : Current and Future In July 2015, as part of the summer Budget statement, the Chancellor announced a new tier of the legal NATIONAL minimum wage to be called NATIONAL LIVING wage (NLW). This would cover all workers over 25 from and be in force from 1 April 2016 at a rate of This initial rate is equivalent to around 55% of media earnings at April 2016 The Chancellor also tasked the Low Pay Commission with considering the pace of the increase such that the NLW increases to reach 60% of median earnings by 2020, subject to sustained economic growth. The Government s objective is to have a NATIONAL LIVING wage of over 9 by 2020.

2 The following table is from the Low Pay Commission Report of March 2016 which was published when they announced the NMW rates for October 2016 and shows forward projections LOOKING AHEAD The Office for Budgetary Responsibility (OBR) has estimated that by 2020, the level of the NATIONAL LIVING wage , at 60% of median hourly earnings will stand at an hour (Source: Office for Budgetary Responsibility, Economic and Fiscal Outlook, March 2016). That forecast has been revised down since November 2015 from to an hour in 2020. It reflects information from the 2015 Annual Survey of Hours and Earnings, which reported slower growth in median than mean hourly earnings, and the downward revision to the OBR earnings growth forecast.

3 If this forecast turns out to be correct and the Low Pay Commission follows a straight path to the 2020 target, the OBR predicts that the NATIONAL Minimum wage for workers aged 25 or over will unfold as follows 2015 2016 2017 2018 2019 2020 NATIONAL LIVING wage (over 25 yrs) NATIONAL Minimum wage (21 to 24 yrs) Source: Office for Budgetary Responsibility, Economic and Fiscal Outlook, March 2016, Supplementary Table The 2017-2020 figures are OBR assumptions in line with their fiscal forecasts Employers should be aware of these projections and build these rates into their financial planning. Future figures for NMW and NLW The Government has announced that NMW rates will now come into force in April of each year from 2017 onwards rather than October as has been previously the case The Low Pay Commission estimate that the figure for NLW for April 2017 is around but they are currently consulting stakeholders (deadline 29 July 2016).

4 The Low Pay Commission will make a recommendation for the NMW and NLW figures to apply from 1 April 2017 to 2018 to the Government in October 2016. Differences Between the NATIONAL LIVING wage and the LIVING wage Foundation s LIVING wage The LIVING wage Foundation ( ) is part of the charity, Citizens UK and they set a voluntary rate that employers can commit to. Their figures are based on the cost of LIVING and set their rates in November( LIVING wage Week). The London rate is set by the GLA and reflects the higher costs of LIVING in London. The current UK LIVING wage is an hour and the London LIVING wage is an hour The LIVING wage applies to all staff (over 18) who work regularly in the company.

5 The exact definition is those who work 2 or more hours a day for 8 or more consecutive weeks of the year Any Employer wanting to be known as a true LIVING wage employer would need to get accreditation from the LIVING wage Foundation. In order to be accredited an employer must pay all directly employed staff the LIVING wage and have an agreed plan in place for third party contracted staff such as contracted catering, cleaning, security, parks or ground staff GMB Policy on the NATIONAL LIVING wage GMB is opposed to workers having to rely on top ups from family tax credits and housing benefits so as to make ends meet. GMB s current campaigns are to Make Work Pay , through an economy that supports a higher skilled, better paid and more productive workforce.

6 This is the key to cutting the social security bill and thereby improving Government finances. We have highlighted many instances where large employers are making millions in profit and can well afford to pay above the NMW. Our policy is to quickly move the NMW rates towards those rates needed for a LIVING wage , to live without being reliant on benefits. The NATIONAL Minimum wage should reflect a true LIVING wage of 10 an hour where workers can live on without state support GMB Policy on Young Workers and the NATIONAL LIVING wage GMB want a fair deal for young workers. The Government s NATIONAL LIVING wage which legally requires employers to pay workers an hour, only applies to workers aged 25 and over.

7 This means that young workers aged 18-24 who do the same work as their over 25 colleagues can be paid between 7% and 26% less. Young workers under 25 have the same LIVING costs as those over 25, and this lower level would lead them to become trapped in in-work poverty and struggle to afford LIVING in a home of their own. GMB continues to push for the removal of age related rates and as a start the NATIONAL LIVING wage should be paid at 18 in line with the LIVING wage . This will protect all young workers from discrimination. GMB policy is to move towards a true LIVING wage which would be needed for workers to live on without being reliant on benefits and this should be negotiated at 10 an hour in line with our 10 Now Campaign.

8 Congress agreed for all GMB branches to implement a 10 an hour negotiating strategy in their Branch Development Plans. Contacts GMB Young Members Network GMB 10 Now Campaign/ Making Work Pay GMB Policy Low Pay Commission LIVING wage Foundation