Businesses defy doomsday predictions to keep staff numbers up despite ‘Living Wage’ bill hike
Minimum wage rose to £7.20 in April leading to fears workers would lose jobs
MOST businesses have defied doomsday predictions and not fired staff to cope with extra costs of the national living wage.
A major study by the Resolution Foundation has found firms have instead raised prices or accepted less profits in order to pay bigger wage bills.
Under the landmark Tory government policy, the minimum wage was initially hiked to £7.20 an hour in April, and is set to pass £9 by 2020.
A survey commissioned by the think tank of 500 businesses carried out by Ipsos MORI revealed only one in seven firms - 14% - whose wage bills have gone up have either used fewer workers or cut current staff hours.
And just one in twelve - 8% - say they have slashed reward packages such as overtime or bank holiday pay.
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Instead, more than a third - 36% - have increased prices, and 29% have decided to live with lower profits.
But the foundation warns that the moves are only short term fixes.
In the years ahead, bosses will need to do more to make their workforce more productive, including giving them more skills.
So far, only one in seven firms say they have invested more in training and just one in eight extra in technology.
Resolution Foundation Policy Analyst Conor D’Arcy said: “Encouragingly, evidence of workers seeing their hours cut or even losing their jobs has so far been relatively limited.
“The challenge now is for firms to continue to respond positively to the National Living Wage, particularly by raising productivity.”
The hit to the economy sparked by Brexit will see 40p an hour slashed from the national living wage by 2020, the think tank also clam.
Instead of the £9 projected level, it will only now be £8.60 in four years time.