Employers must “avoid falling foul of the law” on wages

8 years ago

Employers must “avoid falling foul of the law” on wages

Employers around the UK need to prepare themselves for the vast increase in Britain’s minimum wage in the New Year. Nick Boles, the business minister is urging bosses to prepare and act now to “avoid falling foul of the law.”

The business minister has said that employers in the UK have to get on board with the new policy that will take place in 2016 so that they can “properly reward their staff”. From April the hourly rate will rise to £7.20 for those aged 25 and above. Other research has offered the conclusion that almost 3 in 10 women employees will gain a pay rise by 2020, what seems to be ‘owed’ by the new National Living Wage.

The chancellor George Osborne is planning on increasing the minimum wage for 25’s and above to at least £9 an hour by 2020, which will make the UK one of the highest minimum wages in The Organisation for Economic Co-operation and Development (OECD a group of mostly wealthy nations – on par with France and Slovenia).

So what does that mean for small and medium sized businesses?

Economists in Britain are not able to predict what the outcome of the policy will be in Britain’s labour market – this will depend on how employers respond. Will they cut jobs? Raise prices for the consumers? Accept lower profits? Or try and boost the worker productivity?

According to the Department for Business, Innovation and Skills, almost 93% of the companies that were surveyed responded by saying that the policy is “a good idea.” 88% have said that it will encourage their staff to be more productive, however, only 45% have updated their payroll, which will take into account the staff members that are aged 25 and above. Only 39% have actually communicated with their employees about the changes that will take place from April the 1st.

Many employers usually in the low-paying sectors ‘privately’ disapprove of the policy. They believe they will be the ones that suffer the most especially those in retail, hospitality and social care industries.

The official UK forecaster has calculated that the new minimum wage will cost around 60,000 jobs within the next five years however net employment will rise by about 1 million. – The forecaster has stressed that these estimations are not 100%.

According to the most recent data from the Recruitment and Employment Confederation, the job market is staying afloat. In November, they said that permanent staff placements have grown at the fastest pace in seven months and that temporary billings increased at the most rapid rate in five months.

The association has announced a warning for “pre-Christmas temp staff crisis” as many employers and recruiters have reported the ‘sharpest drop’ in 18 years in the availability of the public to fill those temporary roles.

REC’s chief executive, Kevin Green has said;

“In some sectors, skill shortages could make this a sad Christmas.

“For example, more than two-thirds of recruiters that supply drivers said a shortage of candidates will cause chaos for shops and delayed deliveries for shoppers.”

Green has also said that the viewpoint for 2016 has implied that the public sector was beginning to cut parts of its recruitment activity amongst spending cutbacks at the same time the private sector was “still hunting for skills and talent.”