Over half of all employers (54 percent) say the new National Living Wage (NLW) will have an effect on their wage bill, with three in ten of those organisations that will be affected by the new higher wage floor planning to raise productivity in response. This is according to a new survey published today by the CIPD and the Resolution Foundation (RF).
The survey of 1,037 employers, which launches a joint CIPD/RF investigation into how firms in low-paying sectors will adapt to the National Living Wage, shows that the higher wage floor will have its greatest impact in retail (79 percent) and hospitality (77 percent), where over three-quarters of employers say their wage bill will be affected. In addition, more than two-thirds of employers in the healthcare sector (68%) will be affected.
Overall, almost one in five employers (18 percent) say they will be affected to a large extent by the NLW, a figure that rises to around a third in retail (33 percent) and hospitality (32 percent).
“The National Living Wage was a bombshell for most employers when it was announced in July, commented Mark Beatson, Chief Executive at the CIPD. “It comes into force next April, which does not give employers a lot of time to prepare. Hence we found 26 percent of employers in September saying it was still too soon to say how they would manage the cost implications.
46 percent of employers who expect to be affected by the National Living Wage do not yet know what impact it will have on pay differentials within their business, so there is still considerable uncertainty over what the effects will be.
Just over a quarter of employers (28 percent) think that cuts to corporation tax and national insurance will offset at least some of the extra wage costs, though only one in ten say the tax cuts will offset most or all of the increased costs. However, reflecting the fact that many employers have yet to fully assess the impact of the range of taxation changes, almost a third of employers (30 percent) were unable to give a response.