National Living Wage will “destroy jobs”, says ex-Sainsbury’s boss Justin King
Justin King, former chief executive of Sainsbury's, has described the National Living Wage as “ludicrous”, and claims it will “destroy jobs”.
Read more: July Budget 2015: Will George Osborne’s new national living wage hit the number of people in work?
During a discussion on BBC Radio 4's The New Workplace, due to be aired at midday today, King argued that the new wage could be “10 per cent or 15 per cent higher” than the current minimum pay by 2020, and that this is “not economically justified”.
The new wage will require companies to pay employees who are 25 and over a minimum of £7.20 an hour, up from the current £6.70 set by the Low Pay Commission. The change will come into effect in April next year.
The government hopes that by raising pay, productivity will be improved and the UK will become less reliant on benefits.
“The new Living Wage is an essential part of moving to a higher wage, lower tax, welfare society,” a spokeswoman for the department of business said.
But King commented:
You can't talk about productivity without recognising that one of the consequences of productivity is less people producing the same output.Companies will invest in more productivity and as a consequence there will be less jobs.
King was boss of Sainsbury's for 10 years until he stepped down in 2014 and was replaced by Mike Coupe.
Earlier this week, the British supermarket chain announced its plan to increase the standard rate of pay by four per cent to £7.36 an hour on 30 August.