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How will the National Living Wage affect YOUR business?

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5:30pm 20th July 2015

George Osborne’s recent budget raised a few eyebrows...money

...and one of the hot topics under scrutiny is the new National Living Wage.

At the moment firms have to pay employees over 21’s the minimum wage of £6.50 an hour, but from next April this will be replaced with the National Living Wage and firms will have to pay over 25’s £7.20 an hour, rising to £9 by 2020.

To ‘counterbalance’ this businesses will benefit from a cut in corporation tax to 19pc in 2017 and 18pc in 2020.

But these new plans come as a double edged sword – the Living Wage Foundation states: ‘An independent study examining the business benefits of implementing a Living Wage policy in London found that more than 80% of employers believe that the Living Wage had enhanced the quality of the work of their staff, while absenteeism had fallen by approximately 25%.’

‘Two thirds of employers reported a significant impact on recruitment and retention within their organisation. 70% of employers felt that the Living Wage had increased consumer awareness of their organisation’s commitment to be an ethical employer.’

But the Office for Budget Responsibility predicts that 60,000 jobs across the UK will be cut as businesses won’t be able to cope with the increased wages.

‘Sainsbury’s chief executive Mike Coupe said during the grocer’s shareholder meeting today that the supermarket chain could not commit to paying the living wage within a year as requested’ the Telegraph recently reported.

‘Mr Cridland added: “The further reduction in corporation tax is a welcome surprise but tax reductions for employers don’t appear to match the businesses most affected by a rise to £7.20 in the National Minimum Wage next April – a 7pc increase.”’

So what do you think? Will the new National Living Wage affect your business? Tell the Business Hub your thoughts here

 

 

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