The National Living Wage is a never ending source of controversy both politically and commercially. In 2015, when first introduced, the Government pledged to increase the National Living Wage to £9 per hour by 2020. The message has changed somewhat, with the Government now saying that it is committed to linking minimum wages to average earnings. As a result, the National Living Wage is currently predicted to rise to £8.75 by 2020.
Even with the revised figures, this represents an increase of £1.25 per hour to be made to wages over the next three years. Businesses are, understandably, concerned.
The Federation of Small Businesses has suggested that the rate of increase should slow down - given uncertainty over growth in the economy - and the National Living Wage should increase to no more than £7.85 next year. The Low Pay Commission is due to make its recommendations to the Government this Autumn. they must assess whether higher rates of pay are affordable, or whether they will actually harm the job market - making the cost of employing people simply unaffordable.
Increases are inevitable, but it is the extent of those increases that will govern wage strategies over the next few years. When the living wage was first introduced, businesses warned that they would be forced to make cuts in other areas such as paid overtime or employee benefits.
With other pressures currently on the economy (did someone mention Brexit?), the introduction of gender pay gap reporting and payment of the Apprenticeship Levy, businesses will yet again be asking themselves: what has to give in order to ensure its staff are paid at the minimum rates?
Forthcoming rises to the National Living Wage may need to be delayed because of uncertain growth in the economy, small businesses have said. The wage is currently scheduled to rise to £8.75 an hour by 2020. But the Federation of Small Businesses (FSB) said that target may have to be reconsidered, following a string of poor economic data. The FSB said real incomes, productivity and GDP growth were all falling, with only employment levels improving. Bank of England cuts growth forecasts Interest rates 'will have to rise' As a result, it said the National Living Wage (NLW) should rise from £7.50 an hour to no more than £7.85 next year.