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Published
Feb 17, 2016
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National Living Wage to mainly affect retail, wholesale, hospitality sectors

Published
Feb 17, 2016

In April 2016, the new UK National Living Wage comes into effect. It is mandatory for workers aged 25 and up and set at £7.20 – a rise of 50p relative to the current National Minimum Wage (NMW) rate.

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Now, new research by the Social Market Foundation, in partnership with Adecco Group UK & Ireland, has revealed that the changes will mainly affect the private sector. A quarter of private sector employees will be directly affected, over double the proportion of public sector employees, and the sectors that will be affected the most are retail, wholesale and hospitality.

The research said a "large number of private sector businesses will need to overcome significant productivity challenges in order to cope with the cost of implementing the new National Living Wage."

Nearly a fifth, 18%, of those set to benefit from the NLW are younger workers, but a third of workers above 50 will also gain from the new rate.

For over a third, 40%, of workplaces severely affected by the NLW, financial performance is a key factor in determining pay, while 47% have traditionally linked salary decisions to the minimum wage.

The research also found that 28% of workers who will benefit from the new NLW are in elementary occupations which require no formal qualifications. This includes labourers, cleaners and shelf-fillers.

Nida Broughton, Chief Economist at the Social Market Foundation, said: “The low stock of skills amongst those affected by the new National Living Wage, and the relative lack of access to in-work training, means that businesses and the Government will have to act to make sure that workplace productivity rises alongside the new regulated wage.

“If businesses can increase productivity there is less likely to be a risk of higher unemployment as a result of the introduction of the NLW, and workers will be more likely to benefit.”
 

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