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NLW to take effect today

The National Living Wage (NLW) will be applied from today, with all UK businesses legally obliged to pay workers aged 25 and over the new national minimum wage of £7.20 per hour, up 50 pence.

 

The previous minimum wage of £6.70 will still apply for employees aged 21 to 25.

 

Confirmed in last summers’ Budget, the NLW aims to boost wages for low earners, however concerns have been raised about the affordability of the new rate by businesses

 

These concerns include the potential for businesses to cut back on workers and reduce working hours for individuals, while a possible impact on the use of zero-hours contracts is also being monitored.

 

Josh Hardie, CBI Deputy Director-General, 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 (NLW) 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.

 

“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 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.”

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