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15% of businesses 'can't afford to pay new living wage'

Published 13/10/2015

By next April all employees aged over 25 will have to be paid a minimum of £7.20 an hour
By next April all employees aged over 25 will have to be paid a minimum of £7.20 an hour

One in six Northern Ireland businesses cannot afford to pay the new national living wage, a survey has found.

By next April all employees aged over 25 will have to be paid a minimum of £7.20 an hour, rising to over £9 an hour by 2020.

Although most firms (64%) agreed with the pay increase, 15% said they would be unable to finance it.

Ann McGregor, Northern Ireland Chamber of Commerce chief executive said companies were concerned.

She said: "They have been given little time to prepare for its introdu ction in April 2016 and assess the impact on recruitment intentions particularly around, for example, older apprentices aged 25 plus.

"There are also concerns around the implications on the cost of doing business and the knock-on effects on international competitiveness.

"The view is that the policy has not been well enough thought through and potential impacts not adequately assessed."

The findings formed part of the Northern Ireland Chamber of Commerce latest Quarterly Economic Survey.

It also found that almost half of businesses in the region felt under pressure to increase wages in order to attract new staff.

Almost 60% said they expected wages to rise over the next 12 months with one-in-four firms expected to make pay awards of 2% or more.

Meanwhile, the survey also revealed a loss of momentum in Northern Ireland's economic recovery with a deterioration in the performance of both the manufacturing and service sectors.

Business confidence, competition and exchange rates were among the major worries highlighted in the survey.

Peter Burnside, managing partner with business advisors BDO, said the results reflected the precarious state of the economic recovery.

"The pace of economic recovery has slowed across the UK and this survey shows growth has slowed locally as well and that is disappointing.

"Our precarious recovery is typified by lower confidence on issues of turnover and profitability among Northern Ireland business than throughout the UK."

For manufacturers, there was a sharp drop in domestic orders while cashflow and falling prices remained ongoing worries.

The service sector recorded a fall in the number of firms recruiting, from 91% in the quarter two to 65% in quarter three.

However, for those trying to recruit, the positions were more likely to be permanent, the survey said.

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