With an election now set for December 2019, wage rate announcements will be deferred until at least mid-December, if not January.
November traditionally sees announcements in respect of the applicable rates for both the National Minimum Wage and the National Living Wage to apply from April 2020, following recommendations from the Low Pay Commission in October.
However, with an election now set for December 2019, wage rate announcements will be deferred until at least mid-December, if not January. It is unclear whether the Low Pay Commission’s report will still be published later this month setting out its recommendations or whether this too will be withheld as a result of the “purdah” rules in place once a general election is announced.
The delays could mean that those employers with a 1 January pay review date in place may end up having to set their 2020 pay without knowing how this will relate to the minimum wage rates due to come into effect the following April.
As always, employment policy will be influenced according to our political system but the following changes have been mooted:
For Living Wage employers, the Living Wage Foundation usually announces its real living wage and London living wage rates (voluntary hourly rates calculated according to the cost of living and based on a basket of household goods and services) on the first Monday of November. These rates are currently £9.00 across the UK and £10.55 in London. However, Living Wage employers will need to wait a little longer this year to find out about any increases – the announcement is not taking place until 11 November, as part of the Foundation’s Living Wage Week.
report produced by think tank the Social Market Foundation in October 2019, highlights that despite all of the steps taken by successive governments to increase wage rates, the UK still has a very significant low pay problem with about a fifth of employees earning less than two thirds of the median hourly wage. This is contributing to high levels of in-work poverty, with many remaining stuck on low pay for considerable periods of time.
The reports considers two potential routes to higher living standards – wage progression (being pay rises for workers in a given job position) and career progression (being pay rises achieved through a change in job position). Employer behaviour in respect of wages and career progression is stated to be driven by a large number of different factors including, but not limited to, reputational concerns, pressure from consumers, and employee bargaining power.
The report also explores a number of legal changes which could be adopted to change corporate behaviour on pay and progression in the workforce. These include:
Ultimately, at this stage, whilst the direction of travel (increasing wage rates) may well be a certainty, the rates chosen, the timescales and any other steps taken to reduce in-work poverty and change corporate behaviour on pay will very much be dependent upon the outcome of the general election.
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