· News

More employers paying above the National Living Wage

According to Incomes Data Research’s (IDR) latest survey, employers have responded positively to April's minimum wage uprating and are taking action to improve employee pay.

The IDR’s analysis is based on responses from 56 organisations, three-quarters of which are in the private sector and include the Co-op, Costa Coffee, John Lewis, Tesco and Wilko.

Altogether, the sample covers more than 800,000 employees.

The median lowest pay rate across the survey as a whole is £9.28, some 37p above the National Living Wage (NLW) rate of £8.91.

This is in part because many employers pay their lowest grades above the official minimum.

The importance of paying National Living Wage:

Unilever’s living wage pledge could lift millions out of poverty

National Living Wage increase not enough for frontline workers

Minimum wage boost won't end in-work poverty

Ken Mulkearn, director of research at IDR, said employers paying above the NLW demonstrates change is afoot in the UK employment market.

He told HR magazine: “Research for the Low Pay Commission shows little or no negative employment effects from the introduction of the NLW in 2016, or from successive high increases in it.

“The fact that the latest increase, at 2.2%, is much lower than most of the preceding ones means that the risk of a negative impact from this year’s rise is reduced for most businesses.”

However, Mulkearn highlighted some businesses may struggle to pay above the NLW due to impact the pandemic has had on their profits.

“It might be an issue for some, mostly smaller, businesses, whose activity has otherwise been hit by the pandemic and its associated effects,” he said.

Laura Gardiner, director at the Living Wage Foundation, said despite the incredible difficulties of the past year, they’ve seen record numbers of businesses committing to their staff and accrediting as Living Wage Employers.

She told HR magazine: "This has taken our network to almost 8,000 strong.

“They have found that paying the real Living Wage has given their businesses the resilience they need to survive and prosper through the pandemic and beyond. I’d encourage all responsible businesses to consider becoming a Living Wage employer today.”

Employers who placed employees on the furlough scheme over the past year also said they chose to delay the statutory minimum uplift to NLW.

The majority (60%) reported no longer having minimum-wage workers on furlough and the remainder (34%) applied the uplift to pay rates irrespective of whether workers were on furlough leave or not.

The IDR research also found the majority (78%) of employers believe the NLW is set at an appropriate level, whilst a fifth (20%) feel it is too low.

Just 2% said they think it is too high.

Louisa Withers, director at IDR, said: “Some employers also voiced concerns about the knock-on impact of a rising minimum wage on differentials with rates for staff higher up pay structures.”