A Fifth of Employers Aim to Improve Productivity in Response to National Living Wage

 

Ahead of the introduction of the National Living Wage on 1 April 2016, the Recruitment and Employment Confederation (REC) has released data showing how employers are likely to respond to rising wage bills.

A survey of 191 employers found that:

• A fifth (19 per cent) will invest in training or take measures to increase staff productivity
• Four in ten (39 per cent) will take no action
• 14 per cent will take on fewer staff than planned
• 8 per cent will reduce staff overtime and bonuses
• 2 per cent will make redundancies
• 8 per cent will raise the cost of their goods/services
• 10 per cent are unsure about the action they will take.

Responding to the findings, REC head of policy Kate Shoesmith says:

“Many employers are adopting a ‘wait and see’ approach to the National Living Wage, with 40 per cent saying they will take no action and a further 10 per cent saying they don’t know what their response will be. A significant proportion of businesses will not be affected by the first NLW, but the government has pledged to raise the rate to at least £9 by 2020 - this is likely to impact many firms’ longer-term hiring strategies.  

“It’s encouraging that a fifth of employers are planning to increase productivity, but this is easier said than done. Low-pay sectors such as health and social care are already finding it difficult to attract and retain staff – and there are question marks about how care providers are supposed to meet cost increases.

“For recruiters, it’s important to understand how your candidates and clients might react to the NLW so that you can provide expert advice.”    

The National Living Wage is compulsory and set at £7.20 per hour for all UK workers aged 25 and over. The REC has today launched a guide to help its members prepare for conversations with clients about the potential impact, at http://34.gs/NLW

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Notes to editors:

1. In February 2016 the REC asked employers, “With the introduction of the new National Living Wage in April, do you expect to take any of the following actions?” Respondents were drawn from across the public, private and non-profit sector, and from across a range of industries and sizes of organisation.