The impact of the minimum wage on productivity (longer-term projects)

The Low Pay Commission (LPC) invites tenders for research investigating the impact of the National Minimum Wage (NMW), including the National Living Wage (NLW) on productivity. We are interested in research that considers both within- and between- firm productivity.

This call for research is for projects that will deliver final findings in September 2027 and interim findings in September 2026. If your proposed projects could deliver final findings to a shorter timeframe, we strongly encourage you to bid under LPC 2025/05 (open call for 1-year projects).

The Low Pay Commission is a non-departmental public body that advises the government about the National Minimum Wage (NMW), including the National Living Wage (NLW) and the minimum wage rates for young workers and apprentices. You can view our most recent published remit for 2025 here. We are responsible for evaluating the effects of the NMW and NLW and making recommendations on future rates. To carry out these functions, our work involves:

• carrying out extensive research and consultation with employers, workers and their representatives and taking written and oral evidence from a wide range of organisations;
• analysing relevant data to understand the state of the economy and labour market and the impact of the minimum wage;
• commissioning research projects into these questions.

There are important links between the minimum wage and productivity. The minimum wage may boost productivity by encouraging employers to invest in capital or skills, or by accelerating the movement of resources to more productive parts of the economy. On the other hand we often hear from small businesses that minimum wage increases reduce their ability to invest in new technology. At the same time, productivity improvements driven by other factors may reduce the risk of negative adjustments to minimum wage increases, such as reduced employment. Past research in the UK and studies from other countries have seen mixed findings on both the existence of and mechanisms for productivity gains.

This research will fill gaps in our understanding of the relationship between the minimum wage and productivity in the UK, using the latest available data and methods. It will complement the LPC's own analysis of the economy and labour market.

The estimated maximum cost of the contract is £80,000 (exclusive of VAT; £96,000 including VAT). We recognise that proposed projects may vary significantly in their scale and resource requirements and anticipate bids in the range £40,000 to £80,000.