Employers need help to absorb living wage hike
1st October 2019
Business groups want more support to help employers meet the Chancellor's pledge to raise the national living wage (NLW) to £10.50 an hour by 2024.
Chancellor Sajid Javid announced the planned hike alongside lowering the age threshold for those who qualify for the NLW from 25 to 21.
The NLW 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 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.
"The Government must take action to alleviate the heavy cost-burden facing firms, or risk denting productivity and competitiveness."
The Federation of Small Businesses (FSB) warned that four in ten employers already experienced rising operating costs due to employment costs.
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 national 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, said:
"Raising the thresholds is a delicate balancing act, as too high a bar risks forcing firms to reduce staff numbers amid elevated costs.
"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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