The U.K. government approved a 3.9% increase in the statutory National Living Wage to £13.21 an hour for workers 21 and older, a rise expected to benefit about 2.3 million workers.
The Low Pay Commission (LPC) estimates that £13.44 an hour, a 5.7% rise, would be needed to meet the two-thirds-of-median-earnings benchmark by October 2027. The commission lifted its spring estimate of £13.18 after wage growth and forecasts came in higher than it expected.
The government uses the two-thirds figure as its reference point for the adult rate, while also directing the LPC to weigh labor-market and business conditions. The LPC said £13.21 is above its inflation forecast range for April 2027 to March 2028 and should preserve its value in real terms. It cited weak labor demand, falling vacancies and expected unemployment increases as reasons for a cautious rise.
Vacancies were at their lowest levels outside the pandemic since 2014, the commission said, with hiring especially weak in retail and hospitality. It found no robust evidence that recent National Living Wage increases had reduced employment, but said youth employment had deteriorated.
From April 1, 2027, the hourly rate for workers 18 to 20 will be £11.27. Rates for 16- and 17-year-olds and apprentices will each be £8.31, while the daily accommodation offset, an allowable wage deduction for housing, will rise to £11.53.
The government wants to lower the adult wage threshold to 18, but the LPC recommended pausing alignment for 18- to 20-year-olds, citing weaker demand for young workers. Worker representatives told the commission low-paid households remained under pressure; employer groups raised concerns about cumulative costs, including wages and employer National Insurance contributions.
The Office for National Statistics (ONS) reported that jobs classified as low-paid accounted for 2.8% of employee jobs in April 2026. The measure compares pay with two-thirds of median hourly earnings and does not by itself establish legal underpayment. EconoTimes previously covered UK pay and low-paid jobs.
Low Pay Commission Chair Baroness Philippa Stroud said, “Economic growth has been better than expected this year, but this growth is not leading to hiring.” The commission plans to publish its full annual report in 2027.
