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Response to National Living Wage? Improve productivity

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Ahead of the introduction of the National Living Wage on 1 April 2016, the Recruitment and Employment Confederation (REC) has released data showing how employers are likely to respond to rising wage bills. 

A survey of 191 employers found that: a fifth (19 percent) will invest in training or take measures to increase staff productivity; Four in ten (39 percent) will take no action; 14 percent will take on fewer staff than planned; 8 percent will reduce staff overtime and bonuses 2 percent will make redundancies; 8 percent will raise the cost of their goods/services and 10 percent are unsure about the action they will take. Responding to the findings, REC head of policy Kate Shoesmith says:

“Many employers are adopting a ‘wait and see’ approach to the National Living Wage, with 40 percent saying they will take no action and a further 10 percent saying they don’t know what their response will be. A significant proportion of businesses will not be affected by the first NLW, but the government has pledged to raise the rate to at least £9 by 2020 – this is likely to impact many firms’ longer-term hiring strategies. It’s encouraging that a fifth of employers are planning to increase productivity, but this is easier said than done.

Low-pay sectors such as health and social care are already finding it difficult to attract and retain staff – and there are question marks about how care providers are supposed to meet cost increases. “For recruiters, it’s important to understand how your candidates and clients might react to the NLW so that you can provide expert advice.” The National Living Wage is compulsory and set at £7.20 per hour for all UK workers aged 25 and over.

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