This briefing looks at trends in the value of the UK National Minimum Wage, the number of jobs paid at the National Minimum Wage and how the National Minimum Wage compares internationally.Jump to full report >>
The National Minimum Wage (NMW) applies to most workers and sets minimum hourly rates of pay. The rates are provided in regulations made by the Secretary for State with parliamentary approval, based on the recommendations of the Low Pay Commission (LPC).
NMW rates vary by age group. From April 2017, the minimum wage is:
The value of each minimum wage rate is higher in real terms (i.e. has increased faster than prices) since the NMW was first introduced in 1999. However, in the aftermath of the 2008/09 recession, the real value of all minimum wage rates decreased. With the exception of the rate for 16-17 year olds, the various NMW rates have now increased again in real terms to above their pre-recession levels.
Unlike the other NMW rates, the National Living Wage is subject to a Government target that its value must reach 60% of median earnings (the point at which half of people earn more and half earn less) by 2020. At October 2017, the National Living Wage stood at around 57% of median earnings for people aged 25 and over, as estimated by the Low Pay Commission.
The Low Pay Commission estimates that there were 1.9 million jobs paid at or below the NMW in April 2017, around 6.7% of all employee jobs. This compares to 1.5 million jobs paid at or below the NMW in 2015, before the introduction of the National Living Wage. The coverage of the NMW is expected to increase to around 3.4 million employees by 2020 as the National Living Wage moves towards its 2020 target.
Jobs paid around the minimum wage are concentrated within a small number of low-paying occupations. The Low Pay Commission estimates that half of all jobs paying at or below the minimum wage are in retail, hospitality and cleaning & maintenance occupations.
The UK has a relatively high minimum wage, in terms of monetary value, compared with other OECD countries. In 2016, the UK had the ninth highest adult minimum wage out of 27 OECD countries (based on the National Living Wage rate) after taking into account differences in the cost of living.
Commons Briefing papers CBP-7735
Authors: Jennifer Brown; Feargal McGuinness