Submission to Low Pay Commission 2023 National Minimum Wage
Issued: March 2022
Summary
This submission to the Low Pay Commission's consultation on the National Minimum Wage for 2023, presents the impact of the recent volatility in living costs on the adequacy level of the National Minimum Wage and provides a forecast of the potential MESL cost in 2023.
As we emerge from the Covid-19 pandemic the exceptional level of inflation in consumer prices over the course 2021 has put significant pressure on living costs, particularly for lower income households due to the volatility in energy prices. The most recent analysis for the cost of a Minimum Essential Standard of Living estimates that minimum living costs have increased by 3.9% from 2021 to 2022. The Russian invasion of Ukraine, and subsequent impact on energy prices in particular, has resulted in even greater inflationary pressure. The ESRI now forecasts a 6.7% rate of increase over the course of 2022.
When considering the appropriate rate for the NMW in 2023, the additional impact of high inflation on low income households must be borne in mind. The current MESL estimate for a working-age single adult forecasts a cumulative increase of 10.9% in minimum living costs from 2021 to 2023.