60,000 jobs may be lost as result of NLW
Omega Resource Group has published a National Living Wage report.
From 1st April 2016, firms must pay £7.20 per hour to every employee over the age of 25, which is an extra 50p an hour for every worker on the current £6.70 National Minimum Wage or a 7.5% increase. The government has stated plans to have the National Living Wage increased to £9 an hour by 2020. The minimum wage will still apply for workers aged 24 and under.
On 8th July 2015, in the Summer Budget, the government announced the introduction of the National Living Wage (NLW). Omega says that over 2.5m workers on the current National Minimum Wage (NMW) will receive the pay rise from April 2016.
The new compulsory National Living Wage is calculated based on the median UK earnings, whilst the current optional Living Wage is calculated based on the cost of living. As it is still lower, Omega claims the National Living Wage might be better described as an increased minimum wage, seeing as the minimum wage was expected to increase to £7 this year in any case.
The Office of Budget Responsibility has predicted that up to 60,000 jobs may be ceased as a result. Omega highlights that the new wage will not just affect those who are currently paid £6.70 but also any employees who are paid up to £7.19. Further still, those who are currently paid around £7.20 per hour will expect a pay rise to maintain the wage gap from their peers. These rates will be reviewed annually by the government and advised by the Low Pay Commission (LPC).
For workers under the age of 25, the current minimum wage will remain:
21 – 24 18-20 16-18 Apprentice (16-19)
£6.70 £5.30 £3.87 £3.30
Raymond Pugh, co-founder of Omega Resource Group, said, “The new National Living Wage will change the future of business structures forever. Sectors such as construction, engineering and logistics who rely on fast-paced recruitment will be affected the most so they must ensure compliance. We’re hoping that the new wage will improve living standards for employees in the UK and produce better performance and a higher retention rate for businesses.”