National living wage for over-25s to have modest impact on costs
Chancellor George Osborne’s new Living Wage, a higher minimum wage for over-25s, will be affordable to most industries but could severely impact others, a think tank said today.
Around half of the employees set to benefit from the National Living Wage (NLW) are in industries where the resulting wage bill increase will by 0.6 per cent or less, according to the Resolution Foundation. These include education, health, manufacturing and construction.
However, it warned that the impact in hospitality, retail and support services will be significantly larger. Firms in the hospitality industry are estimated to face the biggest climb in their wage bill – 3.4 per cent by the end of the decade.
NLW will be introduced at £7.20 an hour from next April but will rise to £9.00 an hour by 2020.
“Past warnings about the negative effects of the minimum wage on employment have been wide of the mark, but the size of the increase in the new wage floor will certainly be challenging in sectors such as hospitality, retail and care,” said Conor D’Arcy, a policy analyst at the Resolution Foundation.