Third of UK to benefit from National Living Wage

Posted on 31 Mar 2016 by Victoria Fitzgerald

From April 1, UK workers aged 25 and over, who earn the minimum rate of £6.70 per hour will receive a 50p pay increase.

More than one million workers are set see their pay packets rise by up to £900 a year. Government has called it “the largest annual increase in a minimum wage rate across any G7 country since 2009, in cash and real terms”.

However, according to a report released by think tank, Resolution Foundation, the number of workers benefitting from the changes will differ substantially across the country.

The report states that as much as a third of the country will get a pay rise, with other areas seeing little difference.

Workers under the age of 25 will continue to collect the lower pay rates of the National Minimum Wage.

The research revealed that 22% of the Sheffield workforce is predicted to enjoy the hike, with parts of London and the South East estimated to see little benefit.

Specifically, only 3% of Londoners are likely to see any improvement.

Additionally, the Office for Budget Responsibility has forecast substantial job losses, as employers attempt to balance the extra cost.

Chancellor of the Exchequer George Osborne speaks at St David's Hotel, Cardiff Bay during his visit to Cardiff (image courtesy of WalesOnline
Chancellor of the Exchequer George Osborne speaks at St David’s Hotel, Cardiff Bay during his visit to Cardiff (image courtesy of WalesOnline).

Chancellor George Osborne said: “The new National Living Wage is an essential part of building the higher wage, lower welfare, lower tax society that Britain needs and it’s great to see that over a million people will see their living standards boosted when this comes into force on 1st April.”

“Britain deserves a pay rise and this one-nation government is making sure it gets one, helping more people have the security of a higher wage to provide for themselves and their families.”

CBI deputy director-general for policy and campaigns, Josh Hardie commented: “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.

Hardie added: “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.”