The most profound impacts of the National Living Wage (NLW) will be felt by lower-paying city regions such as Sheffield, Nottingham and Birmingham, according to research from the Resolution Foundation.
The National Living Wage, the new wage floor of £7.20 an hour for workers aged 25 and over, is due to come into effect in April. By 2020 around six million employees in the UK (23% of all employees across the workforce) will be affected.
In Sheffield 28% of employees will be affected by the new rules by 2020, and in Nottingham 27%. By contrast only 13% of workers in Oxford and 14% of Londoners will experience changes.
According to the Foundation, minimising job losses and ensuring that large groups of workers do not get stuck earning only the legal minimum should be a top priority for national government, local leaders, businesses and soon-to-be elected city mayors. The report suggests a focus on boosting productivity and progression in low paying sectors such as retail, hospitality, cleaning and care will be needed to ensure that the NLW is affordable for local employers.
Adam Corlett, economic analyst at the Resolution Foundation, said implementation of the NLW will be “challenging”.
“The National Living Wage will have a huge impact on low pay, particularly towards the end of the parliament as it approaches £9 an hour,” he said. “But implementing the new wage floor will be challenging, particularly in cities like Sheffield where wages tend to be lower. National, local, and new regional politicians must work closely with employers to ensure that the National Living Wage is a success, particularly in low paying sectors.
“It will take more than a higher wage floor to tackle Britain’s low pay problem,” he added. “Expanding the reach of the voluntary living wage campaign will still deliver higher pay for thousands of workers. It’s also vital that employers create progression routes at work so that staff can be lifted out of low pay altogether.”
The Foundation added that despite the name the government’s new legal wage floor is not a ‘living wage’, and there remains plenty of scope to expand the reach of the voluntary living wage, which is currently set by the Living Wage Foundation at £8.25, or £9.40 in London.
