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Consultation Response

Women’s Budget Group Submission to Low Pay Commission Consultation June 2024

The Women’s Budget Group submitted a response to the Low Pay Commission Consultation, June 2024

Summary

We welcome the decision made by the Government to follow the Low Pay Commission’s recommendation to raise the National Minimum Wage (NMW) rates and increase the National Living Wage (NLW) from April 2024. However, the increase of 9.8% in the NLW did not keep pace with inflation (10.1% in March 2023) and NLW workers have therefore experienced a pay cut in real terms. The Consumer Prices Index (CPI) rose by 2.3% in the year to April 2024 1 but, importantly, average private rents have increased by 9.2% in the 12 months leading up to March 2024, 1.5 million mortgage holders will see their payments increase by £1,800 this year, and the Household Costs Index (HCI) inflation remains higher than CPI, at 5% 2 . These figures should be considered when revising the NLW rates to meet the cost of living needs of working-age adults.

While we recognise that the scope of this consultation is limited to the Government’s remit of maintaining the NLW at two-thirds of median earnings for April 2025, the Low Pay Commission is also concerned with wider labour market dynamics, the economic outlook for 2024-25 and the impact of low pay on workers with protected characteristics. WBG’s submission is specifically aimed at shedding light on the gender inequalities in the labour market that interact with low pay and the NLW, as these are important considerations that should be taken into account when developing policies directed at increasing pay rates and reducing poverty. The evidence presented in this response addresses questions related to the experience of women on low pay, including causes and barriers to accessing better paid work, and provides insights on a number of intersecting issues including in-work poverty, social security and Universal Credit, the cost of living crisis, childcare, and the broader interactions of low pay with gender inequality.

Key points:

  • Although the NLW has increased earnings for the lowest-paid workers, this has not been enough to safeguard against poverty. 64% of working-age adults in poverty live in a household where at least one adult is in work 3 , and women, who are more likely to earn below the living wage, are also more likely to be in poverty.
  • Whilst beyond the scope of this consultation, policies aimed at reducing poverty must look beyond paid employment. Despite the introduction of the NLW, rising housing costs, the widespread cost of living crisis and reduced incomes from benefits and tax credits have made it harder for low-income households with one or more earners to escape poverty.
  • Increases to the NLW and the National Minimum Wage (NMW) are a positive development within the labour market but action to tackle in-work poverty needs to consider that a range of factors, not just low pay, contribute to in-work poverty and that women in particular find themselves having to reduce their capacity for paid work in order to meet caring responsibilities.
  • Labour market policies aimed at eradicating poverty and/or inequality need to work holistically in combination with other parts of the social protection system such as social security benefits and adult social care and childcare. Increasing hours and pay is insufficient if families can still not afford childcare, effectively locking one parent (usually the mother) out of the labour market.

 

READ THE Full CONSULTATION RESPONSE HERE
1.

1ONS (2024) Inflation and Price Indices https://www.ons.gov.uk/economy/inflationandpriceindices

2.

ONS (2024) Household Cost Indices for UK Household Groups https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/householdcostsindicesforukhouseholdgroups/october2023todecember2023#:~:text=In%20the%20most%20recent%20month,4.0%25%20(Figure%201)

3.

JRF (2024) UK Poverty 2024 https://www.jrf.org.uk/uk-poverty-2024-the-essential-guide-to-understanding-poverty-in-the-uk

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