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Is the Government considering a National Living Wage freeze?
14 October 2020

New reports have suggested that the Treasury may be considering postponing a planned increase to the National Living Wage (NLW) rates next year.

Under plans outlined last December by then Chancellor, Sajid Javid, the legal minimum wage paid to workers over the age of 25 was due to rise by 6.2 per cent from £8.72 per hour to £9.21 per hour in April 2021.

However, the Sunday Telegraph has reported that ministers and officials have discussed applying an “emergency brake” to the NLW increase in response to the COVID-19 crisis and mounting unemployment.

The Telegraph reported that the current Chancellor, Rishi Sunak, could be due to announce such a change in a future Budget on advice from the Low Pay Commission, which believes that many organisations would not be able to afford the increase in wages for low earners.

Speaking in the Telegraph, Low Pay Commission Chair, Bryan Sanderson, said that it had listened to the views of employers and trade unions carefully, and was considering whether the emergency brake was required.

He said: “There are not many winners in today’s uncertain world. Our contribution to help steer a path through the complexity will be to provide a recommendation founded on rigorous research and competent analysis, which has the support of academics and both sides of industry.”

Although the Government is yet to confirm these claims, it is clear that the Chancellor will have to take action to limit the economic impact of COVID-19 and rising unemployment in his next Budget, which will not take place now until next year.

Link: National living wage could be frozen next year