LRD guides and handbook December 2020

The National Minimum Wage 2021 - a trade union guide

Chapter 5

An emergency brake

[ch 5: page 28]

The LPC’s new remit includes a clause allowing it apply an “emergency brake” in terms of either the target or the timeframe, should the state of the economy warrant it. The indicators of the state of the economy to be considered include: the overall output of the economy, the level of employment (particularly in low-paying sectors) and growth in earnings and productivity. An emergency brake could take two forms:

• a reduction of the increase in a given year, but still committing to reaching the two-thirds target in 2024 by making larger increases in subsequent years; or

• postponing the target year, so the NLW would reach two-thirds of median wages in 2025 or later.