Britain’s National Living Wage has just come into force BUT it is not what the people who originally came up with the concept, the Living Wage Foundation, actually recognises as a Living Wage.
by Kevin Clancy
It suggested £8.25 an hour and £9.40 in London as opposed to the minimum £7.20 an hour for over-25s that has been introduced.
Nevertheless it welcomed its introduction and urged businesses to “aim higher” and pay more than the statutory minimum. Some employers have already pledged to do this. The Foundation’s Director Katherine Chapman said: “The job is not done when it comes to tackling low pay.
“Businesses who can afford to pay a rate that reflects the real cost of living should do so and join over 2,300 employers signed up to pay our higher voluntary Living Wage.
“For profitable business or those who see themselves as innovators and leaders, simply not breaking the law on pay is not enough. Many businesses want to aim higher.”
It is expected to give 1. 8 million workers an immediate pay rise in an attempt to transform the UK into a higher-wage, lower-welfare economy and to rise to £9 an hour by 2020. For workers aged 21 to 24 the National Minimum Wage is still £6.70 an hour.
Some 1 .3 million workers are paid the minimum wage, while another 500,000 who earn slightly more than the current £6.70 an hour will also benefit.
The NLW will also have a bigger impact in regions such as the North, North East and the South West than in London and the south east as it will take the lowest-paid up to a level close to, or in some cases above, the next rung or two up the ladder.
Despite all the predictable claims from the usual sources and vested interests that it will hurt employers and cost jobs the simple economic reality is that the extra wages will go straight back into the economy and not into savings. This should give a boost to those retailers who moaning that their costs have been increased.
Taxpayers should also take some satisfaction from fact that they are not subsidising employers’ profits by enabling them to pay low wages through paying in-work benefits to the working poor.
Financial advice by Kevin Clancy Dip FA MIFS 0208 452 6191 07956 363447 firstname.lastname@example.org