to the April 2016 edition of PSD Board Practice InFocus. This edition looks at
the introduction of the National Living Wage and the effects that it may have
We are about to see the biggest
government intervention in wage setting since the Blair government brought in
the £3.60 an hour minimum wage in 1999. The National Living Wage (NLW) has
doubled from the original amount to £7.20 for the over 25 year olds.
What is the true cost to business of the NLW increase? Who will be
Clearly sectors such as care homes, home care and cleaning,
retail, catering and hospitality will feel the affect. However, other sectors
will be less exposed. Some businesses have already taken steps to protect
themselves from the increased living wage, for example by reducing over time
rates. Other organisations have positively welcomed the NLW, in some cases even
extending the benefits to the under 25s.
Will this cost jobs? Will it
increase prices? Will it reduce profits?
There seems to be a general
lack of consensus on the real affect this will have on business. In the past
the effects of minimum wages have been over estimated and there are a
considerable number of economists who do not expect the NLW to have a
significant effect on wages and prices across the economy as a whole.
part of this ongoing debate, PSD's Board Practice offers two personal
perspectives on the effect of the National Living Wage. Firstly Sharon White
CEO, at Stephenson Harwood LLP shares her views of the new NLW and secondly
Flemming Hansen of PSD's Board practice considers the effects of the NLW on
the hospitality and leisure sector.
I very much hope that you enjoy
this edition, and look forward to hearing your views and comments.
MD - Board Practice
You are likely aware of the general idea - if not the detail - of the
Living Wage. Under the scheme, employers agree to pay an hourly rate which
reflects the cost of living in the UK, rather than the minimum level of pay as
legislated by the government.
The middle brands in the Hospitality and Leisure sector will feel the
squeeze. PSD’s Flemming Hansen considers the effect of the National Living Wage
on the Hospitality and Leisure Sector.