Recent news articles have reported that the government is to increase the national living wage from April 2020. Rises are set to be between 4.9% and 6.5%.
For those over 25 it will be a rise of more than four times the rate of inflation, taking the hourly rate to £8.72.
However, businesses have warned that such increases will put pressure on company costs. Hannah Essex, co-executive director of the British Chamber of Commerce has said many companies “have struggled with increased costs in a time of great economic uncertainty. Raising wage floors……will pile further pressure on cash flow and eat into training and investment budgets. For this policy to be sustainable, government must offset these costs by reducing others.”
The new National Living Wage rates from April 2020 are:
- for ages 25 and above – up 6.2% to £8.72
- for ages 21 to 24 years old – up 6.5% to £8.20
- for those 18 to 20 years old – up 4.9% to £6.45
- for those under 18’s – up 4.6% to £4.55
- for apprentices – up 6.4% to £4.15
The Federation of Small Business (FSB) has stated that “an increase of this magnitude” could lead to reduced recruitment, cancelled investment plans or even redundancies. Craig Beaumont, FSB director of external affairs and advocacy has said that, with the increase in business rates of 1.7% in April, small businesses will need support.
An independent report has noted that there is little, or no evidence of jobs been lost due to the minimum wages rises over the years. Professor Arindrajit Dube, a US academic and expert on this subject said there was “room for exploring a more ambitious national living wage” in the UK over the coming years.
He did also state that there is relatively little evidence available and that the Low Pay Commission would be able to review the effect on jobs as wages increased.
The government announced in September of last year, that it will go ahead with the Low Pay Commission’s recommendations that by 2024 the over 21’s will receive the higher national living wage rate. It is set to be £10.50 by this date.
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Source: BBC News
Photo by Fabian Blank on Unsplash
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