National living wage rises today as April 2027 estimate released
The rates of the national minimum wage and national living wage increase from today (1 April 2026) as the Low Pay Commission publishes its first estimate of the wage floor for 2027-28.
The national living wage (NLW), the rate for people aged 21 and above, increases to £12.71 per hour, a 4.1% rise. The national minimum wage (NMW) for 18 to 20-year-olds, meanwhile, increases by 8.5% to £10.85.
The NMW 18-20 rate has risen faster as a result of the government's manifesto pledge to close the gap with the NLW for those 21 and over and create a living wage for "all adults".
A report, published by the Low Pay Commission today, considers the potential impact of the increases, and makes early predictions for the year ahead, based on its latest remit from ministers.
The central estimate for the national living wage rate from 1 April 2027, based on current forecasts, is £13.18. This is required to maintain the rate at a level of two-thirds of median hourly earnings.
This central figure represents a 3.7% increase on today's new NLW. The full projected range for the new rate is between £13.02 and £13.34, translating to an expected increase of between 2.4% and 5.0%.
The LPC stressed that this range is only an illustrative guide, incorporating new data and forecasts made since October, but it added: "Earnings forecasts are inherently uncertain and changes in economic conditions (including from the impact of the conflict in the Middle East) mean that these numbers could change."
Baroness Philippa Stroud, LPC chair, said: "A lot has changed since we gave our advice to the government last autumn, and we are now beginning to gather evidence for recommendations later this year. The current economic uncertainty makes it essential that the Commission hears from those affected by the minimum wage and builds consensus for evidence-based recommendations."
The report discusses lowering the age eligibility for the NLW to 20 from April 2027. While this would increase the number of people being paid the NLW, it would also lower the level of median earnings on which the rate is based.
'Squeezeflation'
Meanwhile, analysis from Brightmine has revealed that sustained NLW increases are creating a "squeezeflation" effect for mid- and higher-paid employees as pay differentials between roles narrow.
The NMW and later the NLW has risen faster than RPI inflation in 17 of the past 26 years, and has outpaced average earnings growth in 18 of the last 26 years. As a result, organisations are allocating a growing share of pay budgets to entry-level roles, leaving less headroom for progression across mid-level and senior grades.
This squeezeflation effect means pay gaps between roles is narrowing. In 2024, entry-level pay rose by 12.9% in 2024, compared with 7.6% for intermediate roles, and 5.8% for senior staff, weakening employees' financial return on progression and incentives to move up.
Jennie Jakubowski, head of data operations at Brightmine, said: "Squeezeflation is steadily eroding perceived pay progression, with many employees feeling the pressure as costs rise faster than wages and employers struggling to maintain clear differentials between roles.
"For businesses, the challenge is finding a balance between fairness and affordability. Many are exploring structural changes, such as simplifying pay bands, introducing clearer skills-based progression, and strengthening career pathways. There is also a growing focus on the wider reward package, including wellbeing and development, alongside clearer communication, so employees better understand how they can progress and what they are working towards."
Brightmine also found that 63% of employers cite limited promotion or progression opportunities as a reason for staff turnover, while 60% claim that their pay and benefits are not competitive, highlighting how stalled progression and narrowing pay gaps are contributing to staff turnover.
