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Increase the National Living Wage to 60% of median earnings by 2020

Last updated: 10:17pm 3 December 2019

A new Conservative government will continue to increase the National Living Wage to 60 per cent of median earnings by 2020 and then by the rate of median earnings, so that people who are on the lowest pay benefit from the same improvements in earnings as higher paid workers.

Conservative Party Manifesto 2017, p.16

Our verdict

The National Living Wage (NLW) is the legal minimum wage for those over 25 years old (there are different bands of minimum wages for those younger than 25). Median earnings is one of many ways to measure income levels. If we were to list all incomes from highest to lowest, the median average is the middle point of the list, chosen by analysts because it is less affected by very high earners or very low earners than the mean average (here’s a refresher on averages in case GCSE maths feels a long time ago). So whatever the median figure is (the Office for National Statistics measured it at £29,400 for the financial year ending April 2019), this policy promises to ensure the National Living Wage rises to 60% of that amount by 2020.

When the government was elected in June 2017, the minimum wage was £7.50 per hour, which was 57% of the median income. Since then, the NLW has risen to £7.83 per hour in 2018, and then to £8.21 per hour from April 2019.

60% of the April 2019 median income would work out at £17,640. If we calculate full-time work as 37.5 hours a week (according to the government full-time work is usually anything above 35 hours) and allow for zero holiday time, then a yearly income on the current NLW would only just break £16,000 (37.5 x 8.21 x 52 = 16009.5). That is a long way short of £17,640. Even working 40 hours per week with no holidays would not break the 60% barrier.

The Low Pay Commission advises the government on the level of the National Living Wage. In March 2019, the government’s remit to the Commission asked it to “recommend whether economic conditions allow for the rate effective from April 2020 to meet 60% of median earnings by October 2020”. So this policy objective was still on the table, but the Commission has not yet made its recommendations for 2020.

There have been advances made on this pledge, with an increased rate in 2019, but the threshold of 60% of median earnings was not met by this government before the end of its term of office. This policy will remain ‘in progress’.

60% of the facts is OK, but higher is better!

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