National Living Wage

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The National Living Wage is a key policy announced by the conservative government in July 2015. It will see, in April 2016, the implementation of an increase to £7.20 from current minimum wage levels. This figure is set to grow to £9 by 2020. Whilst this may seem a large increase it is still in fact lower than an independently determined National Living Wage which presently sits at £8.25 (and £9.15 in London). That being said many employees, aged twenty-five and over, will experience a not insubstantial increase in their wage packet. This has obviously caused concern for some employers, with annual minimum pay rising by £910 / annum. However, doomsday predictions touting massive rises in unemployment should perhaps not be taken too seriously. Similar scenarios were sounded in 1998 when the then Labour Government brought into force a National Minimum Wage, causing arguably much greater upheaval for businesses sector. This line of thinking ignores the potential benefits seen by a better compensated workforce. Research indicates that companies paying what is deemed a ‘fairer wage’ will see greater customer loyalty who will, on an individual basis, prefer to take their custom to a company they see as justly compensating their employees. (This is a similar rationale to the one that saw Starbucks voluntarily agree to pay Corporation tax in 2012). Additionally, it has been noted that a more well compensated workforce will operate more faithfully with higher rates of productivity and reduced staff absenteeism. It will be interesting to see what changes if any, will be seen therefore as result come April this year.

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