Retailers challenge national living wage

London - While the government has thus far been successful in its policy to increase the UK's national living age, some businesses and retailers are keen for the policy, set to come into full affect by 2020, to be revised or abandoned.

According to the Financial Times, 16 trade associations are challenging the policy, having written to new business secretary Greg Clark recommending he “exercise caution” on the national living wage in light of the “economic uncertainties the country faces” after the Brexit vote.

The national living wage is one of George Osborne's legacy policies, to ensure over 25 year-olds earn a median income, which by 2020 would be just over 9 pounds per hour. The wage was increased as of April 1st this year to 7.20 per hour.

Fashion businesses expected to have to raise wages

Fashion chains, supermarkets and the hospitality sector are expecting to have to raise wages. The British Retail Consortium, which represents shops, has claimed that as many as 900,000 jobs could be lost in the sector, as a result of both the NLW and the Apprenticeship levy.

The 16 trade associations would like the government to drop the 2020 target and restore the original powers of the Low Pay Commission, the committee of experts tasked with recommending minimum wage rates each year.

The increase in wages will mean the minimum wage for over 25 year-olds will be the highest in the developed world and G7. It is also the fastest increase in the UK's history. Some economists have described it as a “radical and untested policy”: some believe it will boost productivity and equality; others fear it will cause widespread job losses.

A spokesman for the business department told the FT the government is “committed to building an economy that works for all and ensuring that the national living wage works for employees as well as businesses of all sizes”.

The penalties for companies not adhering to the minimums will face steep fines. From 1 April, penalties for non-payment of the NLW will be doubled, from 100 percent of the money owed, to 200 percent. Employers found guilty can be disqualified as a company director for up to 15 years.

The maximum penalty will remain at 20,000 pounds per worker.

A new enforcement team has also been set up at HM Revenue and Customs (HMRC) to pursue criminal prosecutions.

Photo credit: National Living Wage