The government’s decision to scrap the ‘National Minimum Wage’ and launch its new ‘National Living Wage’ on April Fools day was either brave, comical or sinister, and probably a bit of all three.
From April 1st 2016, it becomes a legal requirement for all employers to pay their employees at least £7.20 an hour. That’s a rise from £6.70 an hour, which works out at around £15,000 a year if you work a 40-hour week.
After all, any increase to wages and standards of living should be applauded, and the increase is tipped to affect some 1.5 million people’s pockets.
But should we call it a living wage? It’s a nice re-brand but is it fair or factually correct? What it seems to be at first glance, is simply an increase to the existing minimum wage. To call it anything else is disingenuous at best, quite possibly sneaky and dangerous at worst.
Not only does it damage much of the work that campaigners like The Living Wage Foundation are doing to fight for and champion businesses up and down the country who are actually paying a genuine living wage. But it also assumes that the living wage is some kind of made up idealistic notion when it’s anything but…
The Living Wage
The living wage is an actual specific amount calculated each year by clever people who understand numbers at the Centre for Research in Social Policy at Loughborough University. It’s based on the cost of living and changes every year in the same way our cost of living does. It currently sits at £8.25 an hour for those living outside London and £9.40 if you live in London. It’s quite a difference.
Then there’s the fact that the new national living wage only applies to those over 25, leaving thousands of under 25 year olds left out of the ring; regardless of whether they’re doing the same job as those a few years older than them.
So in truth, we have a lot to do in trying to bring wages in line with the cost of living while at the same time ensuring that small businesses are able to pay those kinds of increases in the first place. And the jury’s definitely out on that one.
Why would you want to pay more?
Here’s a few good reasons from the guys over at the Living Wage Foundation:
- Lower absenteeism and staff turnover
- Higher productivity
- It shows responsible leadership
- It differentiates from competitors and in recruitment
- Because you know your people are the lifeblood of your business
The National Living Wage Fact File
All the details you need to know to get ready for the National Living wage that comes into effect on the 1st April has now been updated in our National Minimum Wage Employer Fact File – including what happens if you don’t comply.
- ACAS helpline: 0300 123 1100
- National Minimum Wage Website
- How to work out the minimum wage for different types of work
- National Minimum Wage calculator to check if payments are over the minimum wage.
Let us know what you think of the new rise. Will your business struggle to pay the new minimum? Have you already been paying more than that for years? We’d love to hear your thoughts on how this might affect other small businesses.