National Living Wage: winners and losers

Jamie Harvey

Jamie Harvey


Whether you’re directly affected by the introduction of the National Living Wage or not, you’ll almost certainly have heard of it.

It’s only been a legal requirement for a few weeks, but we’re already seeing a number of changes in the way businesses are resourcing and rewarding those staff who are now more expensive to employ.

Luckily, at this time of rising wage costs, Rotaready already has a range of cutting-edge tools to dramatically reduce the time you spend managing staff, rotas and budgets.

What’s all this about then?

The National Living Wage applies if you're 25 or older

The National Living Wage applies if you’re 25 or older (credit: ACAS)

Since 1 April, the National Living Wage is law. Put simply, if you’re 25 or older, you’re entitled to a minimum of £7.20 per hour (higher than the National Minimum Wage of £6.70 per hour). It’s due to rise to £9 per hour by 2020.

Don’t confuse the National Living Wage with the confusingly-similarly named voluntary Living Wage (set by the Living Wage Foundation), which is calculated according to the basic cost of living in the UK. Currently, it’s £8.25 per hour and £9.40 per hour in London.

The National Living Wage is expected to have a bigger effect on industries which typically rely on lower paid employees – such as retail and hospitality.

Is it a good thing?

It’s fair to say the National Living Wage has had a mixed reception.

Real wage increase since Q1 1964 (credit: ONS)

Real wage increase since Q1 1964 (credit: ONS)

It should come as great news for an employee who’s 25 or older, currently on the minimum wage. From their perspective, a 50p per hour rise represents a pay rise of up to 10.8%, five times the current earnings growth rate across the UK. At a time when the gap between executive pay and workers is getting wider, those campaigning for equality will celebrate the introduction of the NLW as a step in the right direction. In fact, 4.5 million people are expected to benefit this year, rising to 6 million by 2020.

However, equality campaigners have voiced concerns with the scheme, with the main points being:

  • even by the time the NLW has reached £9 per hour in 2020, it’ll still be lower than the Living Wage required to live in London at today’s prices
  • those under 25 will see no benefit, and in fact are discriminated against, as they may earn less than their elder colleagues for doing the same job

For businesses, the increased wage spend comes at a time of continued financial uncertainty, and many will undoubtedly be looking for ways to make savings.

What are businesses doing to adapt?

Businesses will adapt to meet rising wage costs (credit: Reuters)

Businesses will adapt to meet rising wage costs (credit: Reuters)

There is still a great deal of underlying financial uncertainty, and many businesses have not fully recovered from the 2008 crash. Employers will find ways to offset the rising costs to meet their increased wage budgets.



How can Rotaready help?

The improvements and benefits Rotaready offers become even more  significant with the introduction of the National Living Wage. Here are 3 which are particularly relevant:

  • Efficiency savings. Our awesome software saves time in every facet of managing staff and rotas. From tracking staff availability and skills, to building and managing rotas, to handling attendance events and building reports, Rotaready will save you hours every week.
  • Wage costs and budgeting. With a suite of forecasting and budgeting tools, Rotaready helps you ensure you stay on top of your wage costs. Rotaready’s automatic wage cost calculator shows you the live cost of staffing by factoring in salaried staff or hourly paid staff, holiday pay, paid absence and even National Insurance contributions.
  • Special pay rates. Calculating employees’ gross pay can be a nightmare, especially when trying to factor in different pay rates for different types of shift, different times of day, or even different days (e.g. Sunday pay or Bank Holiday pay). Rotaready automates all this for you, giving you enhanced management information and saving yet more time.

What are your thoughts on the National Living Wage? Whether you’re affected as an employee or employer, let us know what you think.

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