The New ‘National Living Wage’ – What Does it Mean for London?

This report makes the case for a London-specific Minimum Wage.

Since 1998, the National Minimum Wage has been set by the Low Pay Commission based on their calculation of the highest level which would not damage employment. In July 2015 the Chancellor effectively replaced the National Minimum Wage with a new National Living Wage for those aged 25 and over. This new rate would no longer be set with regard to employment, but would instead move towards a target 60 per cent of median income by 2020.

In previous research, we’ve argued that London could support a higher minimum wage that could progressively be increased to a long-term rate as much as 20 per cent higher than the national level without leading to job losses.

This estimate was arrived at by shadowing the methodology used by the Low Pay Commission but applying it to the London economy rather than the UK economy. Since then there has been considerable discussion of a London Minimum Wage.

This new paper updates the previous estimate we made in London Rising. 

Key findings

  • From October 2015 a London-specific Minimum Wage could be set somewhere between £7.05 and £8 an hour.
  • Given that the Chancellor’s new National Living Wage will begin at the lower end of that range, starting from £7.20 an hour in 2016, it should not lead to significant job losses in London.
  • The bulk of the 60,000 job losses that the Office of Budget Responsibility estimates will occur as a result of the new policy are therefore likely to be outside London.


Supporting documents


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