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Three-quarters say NLW will lead to pay rises across the board


Kronos advises that organisations will need to understand what motivates staff to drive increased performance

Almost three-quarters (71%) of employees believe that the National Living Wage (NLW) will lead to pay rises across the board, according to research from Kronos.

Announced in the summer budget, the NLW is initially set at £7.20 and will be paid to all workers aged 25 and over. It will be introduced on 1 April. Kronos estimates this could potentially add
£11 billion to the national wage bill.

The 2,000-plus respondent survey found that the impact of the National Living Wage might differ across generations, as 62% of 16- to 24-year-old respondents stated they would be more loyal to employers if paid the higher wage, compared to only 36% over the age of 55 who said they felt the same. This is perhaps due to the fact that the NLW will not be mandatory for those under 25, so those of this age enjoying it would be more grateful to their employer for voluntarily choosing to offer it.

Kronos advised that organisations will need to understand what motivates staff in order to drive increased performance and mitigate the raised wage bill. Two in five (41%) respondents rated flexible working as their number one perk, placing it above benefits such as increased basic pay and additional paid holiday. However, respondents over the age of 55 are the least motivated by flexible working, with only 37% choosing this perk, compared to 45% for the 35 to 44 age group.

More than two-thirds of respondents (67%) claimed that they would have been more loyal to their current employer if they had proactively introduced the National Living Wage ahead of the legislation.

Brenda Morris, general manager UK for Kronos, said that employers must remmeber that employees are not only driven by money.

“The National Living Wage will force businesses to look at productivity and how to maximise the value from what is often regarded as an organisation’s most valuable asset, its people,” she said. “While ultimately organisations need to focus on productivity, just paying employees more will not necessarily drive productivity gains. It’s critical that organisations look closely at the wider benefits that motivate their workforce and how they can tap into these to boost overall performance and profitability.”