Living Wage set to have a knock-on effect
IN APRIL 2016 the National Living Wage of £7.20 per hour will be introduced, a figure that more than 10% of people working in Buckinghamshire do not currently earn, according to new data from the Office for National Statistics.
This figure includes more than a quarter of part-time workers and almost 40 per cent of men working part-time.
The introduction of the living wage will be keenly felt by businesses and employers are already considering the options available to them to help them cover these additional costs.
The feedback I am hearing from local business owners mirrors the results of a survey published by The Resolution Foundation and the CIPD, which found that more than half of employers say the new Living Wage will have an effect on their wage bill and a fifth expect to be affected to a large extent.
When asked how they would react to the Living Wage changes, almost a third said they would aim to improve efficiency/ productivity, while 15 per cent of employers said they would reduce the number of employees through redundancies or slower recruitment and seven per cent said they would scale down plans for expansion.
This leaves Buckinghamshire business owners considering their options. Many feel that they have no choice but to raise prices in the face of the new Living Wage.
And we should also consider the interesting area of pay differentials.
A quarter of employers say that the new Living Wage will reduce the pay differential between those getting a pay increase and their managers, according to The Resolution Foundation and CIPD survey, while 20 per cent say it will maintain pay differentials.
This leaves a question unanswered – will employees already earning over the Living Wage benefit feel the ripple effect of the wage floor being lifted below them, or will they be effectively priced out of a wage rise?
Buckinghamshire has relatively high full-time earnings compared to the rest of England, but the county is still not immune to the impact that the new Living Wage will have on businesses.
I would like to know how your business will be affected by these changes.
Do you expect your pay differentials to change? Will you chase greater productivity to compensate for higher wage costs?