Apr 01, 2016

The National Living Wage – more money in your pocket? Or less jobs on offer?

The National Living Wage (NLW) comes into effect today (1^st April). This is a minimum amount per hour that most workers in the UK are entitled to be paid. Today’s increase sees this rise to £7.20, up 50p from £6.70. Although, the government is committed to increasing the NLW every year, which will see this figure rise to £9 per hour within four years.

You may remember that, back in February, we became a Living Wage accredited employer (not to be confused with today’s National Living Wage) which means we have voluntarily committed to pay our staff (permanent employees and third party contractors and suppliers alike) the minimum hourly wage of £8.25 – which is over £1 an hour higher than the increase which has come into force today. The Living Wage is set every year and calculated as the amount a full time worker needs to earn in order to afford a decent standard of living.

We think it is vital that staff are supported and paid for the role they play in driving a business forwards and, therefore, believe the introduction of the National Living Wage is a positive thing. However, it will no doubt have implications for retail businesses in the UK as they see their wage bills increase.

Research from the British Retail Consortium suggest that, by 2020, retailers will have to find an additional £3bn a year to pay staff at the new minimum wage (these figures have assumed that current differentials between entry and mid-level staff will remain, and that NLWL will be offered to all employees and not only those aged 25 and above).

So whilst employees across the country are likely to be welcoming today’s news does it have negative implications for the customer? Will we see price hikes to pay for the increase? Or will customer service suffer as retailers consider reducing their staff numbers to make these figures work? The flip side, of course, is that retailers will actually benefit as their customers will now have more money in their pockets.

An article in the FT recently has suggested that today’s announcement may also drive further investment in technology as retailers look for machines that can replace staff in ever more sophisticated tasks. The past decade has already seen quite a significant shift in retail working practices with automatic kiosks replacing checkout cashiers and display ready cardboard boxes replacing the tedium of shelf stacking. This has resulted in a steady decline in the number of shop workers. Will the reality of being replaced by a robot become ever closer now?

And what about the eCommere world? Is this perhaps another nail in the bricks and mortar coffin as pure-play online retailers use the competitive advantage that comes from being a slimmer, less people-heavy organisation? It may certainly give cross-border retailers an opportunity to offer ever more attractive prices to those savvy consumers who are willing to look and buy from abroad.

So how this plays out, only time will tell. In the meantime though we are rather pleased that people are getting a bit more of what they deserve.