National Living Wage: Today’s the day
The compulsory NLW means all employers are obliged to pay their workers aged over 25 at least £7.20 an hour.
Those aged between 21 to 24 will continue to receive the National Minimum Wage, which is currently £6.70 an hour.
The new legislation – introduced in Chancellor George Osborne’s budget last summer – will result in an immediate pay rise for about 1.3M workers.
The Food and Drink Federation (FDF) said the change should be manageable. Its employment policy manager Selga Speakman-Havard told FoodManufacture.co.uk: “The majority of our members already pay above the National Living Wage, paying staff competitively according to market conditions.
‘Food and drink manufacturers’
“Therefore, the increase to £7.20 for over 25s is manageable and the counterbalance of a reduction in corporation tax and National Insurance contributions will go some way in helping food and drink manufacturers to manage this change.”
Some manufacturers have welcomed the pay increase, while other feared it would hamstring businesses. The new rule is expected to have the biggest impact in traditionally low-paid sectors, such as retail and foodservice.
Mike Cherry, Federation of Small Businesses, national chairman, said: “Small businesses are playing their part by creating jobs and boosting pay packets wherever they can.
“Our research suggests that over half of small firms already pay their staff more than the voluntary Living Wage, but those that don’t are often operating in highly competitive sectors with very tight margins.”
‘Hand-in-hand with productivity’
Josh Hardie, Confederation of British Industry (CBI) deputy director-general, with responsibility for policy and campaigns said: “Companies are committed to raising prosperity and living standards – but for wage increases to be sustainable they must go hand-in-hand with productivity growth.
“If the National Living Wage doesn’t get this balance right it will risk being unaffordable for many firms. Smaller businesses and those in key sectors like hospitality, retail and care are likely to be particularly affected.”
Discount retailer Lidl UK said it was “incredibly proud to be the first British supermarket” to implement the recommendations of the Living Wage Foundation, introducing the real Living Wage from October 2015. See more comments about the NLW in the box below.
What they say about the National Living Wage
Selga Speakman-Havard, FDF, employment policy manager:
“In a recent survey of FDF members across the UK on changes to the National Minimum Wage and National Living Wage, 60% of respondents were concerned about the proposal to increase the rate to £9 per hour by 2020 as it does not take into consideration inflation, interest rates or other economic forces. Members have also raised concerns at the speed of this increase and some will struggle with this, reporting that it may have a detrimental impact on jobs, permanent contracts and hours.”
Mike Cherry, Federation of Small Businesses, national chairman:
“While it is easy to say everyone deserves a pay rise, the only way to deliver and sustain higher wages in the long run is to improve productivity, boost skills and drive business growth. Without the right type of productivity growth, there is a real risk that in many sectors higher enforced statutory wages will lead to fewer jobs being created, fewer hours for existing staff and, unfortunately in some cases, job losses.”
Josh Hardie, CBI deputy director-general, with responsibility for policy and campaigns:
“Companies have been looking at their business models to manage the extra costs by reorganising the workforce, raising skills, improving leadership and management capacity and investing in new technologies. But even so, some may be forced to reduce hours and benefits for their employees.
“Given that this policy is so significant for so many businesses, the government should listen to – and act on – the advice of the independent Low Pay Commission, which is well-placed to monitor and recommend the best way to make this policy contribute to prosperity over the long term.”
Lidl spokeswoman:
“Every single Lidl employee is playing a crucial role in our success, and introducing the Living Wage was an important way for us to acknowledge this, underlining how much we truly value their contribution and commitment to helping us deliver the ‘best quality for the best price’ to our customers.”
