Wage Rise Woes

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01 Dec 2016

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The announcement of the National Living Wage increase in April 2017 has already caused ripples of concern for many employers.

During his Autumn Statement, Chancellor Philip Hammond broadcast that the NLW would increase by 30p, to £7.50 an hour as of mid-2017. However, Hammond’s declaration has not had a positive reception from the Organisation for Economic Co-operation and Development (OECD), who advised that the UK should be careful regarding plans to raise the NLW, and offered a word of warning for the roll-out of the policy, stating: "Caution is needed with the implementation of the policy to raise the National Living Wage to 60% of median hourly earnings by 2020. "The effects on employment need to be carefully assessed before any further increases are adopted, especially as growth slows and labour markets weaken." However, the body to monitor low pay for the government: The Low Pay Commission, said it had found “no clear evidence” of changes in employment or hours since the wage was introduced. The NLW came into effect in April this year at a rate of £7.20 per hour for workers aged 25 or over. The Low Pay Commission added that employment had continued to rise, even in the sectors which were most obviously affected, such as hospitality, retail and cleaning. “In some cases”, they say employers may have reduced payments or benefits to fund the higher basic wage, but they have found “no significant change” in levels of overtime and higher hourly rates paid for Sundays or bank holidays. The government are aiming to increase the rate to £9 an hour by 2020. According to the UK’s Office for Budget Responsibility, it’s estimated that it will give 1.3 million workers a pay rise.

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