New survey shows pressures of National Living Wage

A new survey by global business advisory firm AlixPartners of company leaders in the retail and leisure sectors has found that only 24 percent believe that the new National Living Wage will have an “overall positive impact” on their industry.

The UK National Living Wage comes into effect in April and will be set at 7.20 pounds, rising to around 9 pounds an hour by 2020 for all staff older than 25 years of age, and AlixPartners asked companies leaders what pressure it would put on their businesses.

AlixPartners found that all respondents would implement the National Living Wage recommended by the UK government of 7.20 pounds, instead of that recommended by the charity the Living Wage Foundation that suggested 8.25 pounds outside of London and 9.40 pounds in London. Adding that more than 30 percent of those surveyed are already budgeting to take account of the 9 pounds target for 2020.

To implement the changes, retailers stated that they planed to offset the cost by increasing prices for their goods or services, to look at labour-scheduling efficiencies, as well as consider staff reductions.

The survey also showed that more than 84 percent of respondents said that the introduction of the National Living Wage and failure to change Sunday trading laws will make the UK a less attractive place to do business.

"In a very competitive marketplace, this government-enforced wage increase offers potential advantages to the strongest, best-capitalised companies. Such companies should be better able to absorb the cost increase in the event that customers won’t accept increased prices,” said AlixPartners. “Forward-thinking companies appear to be trying to use the legislation as a positive way of engaging with their workforces.”