Belfast Telegraph

Government warned over business cost rises since national living wage introduced

More than a third of British businesses have seen their wage bills rise since the introduction of the new national living wage, according to new research.

Bosses at the British Chambers of Commerce also warned of businesses cutting recruitment plans in the wake of the changes.

The national living wage, which replaces the minimum wage, rose to £7.20 in April for all workers aged 25 and over.

A chamber of commerce survey of more than 1,600 business leaders across the UK found 34% have had to increase their wage bills since its introduction.

It found that two thirds of those surveyed were already paying their staff above the new living wage.

But for those affected by the change, a quarter have already reduced recruitment in order to balance the books.

The research also suggests 34% of these affected businesses plan to do so once the wage reaches £9 per hour, which it is set to by 2020.

Others are looking at changes to staff hours, benefits or pay growth, as well as potentially raising prices.

Marcus Mason, head of education and skills at the British Chambers of Commerce, said: "A decent wage can make a huge impact on employees' lives and their performance at work, and most businesses are able to pay above the national living wage (NLW).

"However, a significant number of firms have already had to re-balance their books to meet the cost of the NLW, which can have a knock-on effect on recruitment or growth plans.

"The Government needs to take an evidence-based approach to setting the NLW.

"The rate should be set by the Low Pay Commission and be determined by the state of the economy, weighing up the various pressures businesses face.

"Further NLW increases need to be proportionate, reflecting business uncertainty, slowing growth and high input costs, to avoid having a negative effect on employment."

A Department for Business, Energy & Industrial Strategy spokesman said: "The Government is committed to building an economy that works for all and the national living wage is doing just that.

"We are making sure this works for employees as well as businesses, and will continue to back small firms by providing an environment in which they can thrive.

"The independent Low Pay Commission is chiefly responsible for making recommendations for National Minimum Wage rates, and now has additional responsibilities to help deliver the national living wage."

The Government has asked the Low Pay Commission to recommend increases to the national living wage towards 60% of median earnings by 2020.