Employers need help to absorb the planned national living wage hike
Business groups want more support to help employers meet the Chancellor’s pledge to raise the national living wage to £10.50 an hour by 2024.
Chancellor Sajid Javid announced his intention to implement the hike alongside lowering the age threshold for those who qualify for the living wage from 25 to 21.
The national living wage hourly rate for over-25s in 2019/20 stands at £8.21 – but more than 6,000 UK employers currently go further than the legal minimum.
The British Chambers of Commerce (BCC) welcomed the Chancellor’s announcement, albeit with caution.
Adam Marshall, director-general of the BCC, said:
“Companies already face significant cumulative employment costs, including auto-enrolment, the immigration skills charge and the apprenticeship levy.
“Action must be taken to alleviate the heavy cost-burden facing firms, or risk denting productivity and competitiveness.”
The Federation of Small Businesses (FSB) welcomed the time employers would have to adapt if Javid delivers on his pledge.
But it warned that the UK’s smallest firms could go bust, and claimed that four in ten employers already experience rising operating costs due to escalating employment expenses.
Mike Cherry, chairman at the FSB, said:
“This increase will leave many small employers struggling and, without help, could make some small firms unviable.
“Any drop in age eligibility for the living wage should be gradual. A sudden drop to 21 poses a real risk to jobs and the economy.”
Tej Parikh, chief economist at the Institute of Directors, added:
“Raising the thresholds is a delicate balancing act, as too high a bar risks forcing firms to reduce staff numbers amid elevated costs, particularly with Brexit disruption on the cards.
“It’s crucial that the approach is evidence-based, which is why the Low Pay Commission was set up in the first place.”
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