Today marks the 100th day since the implementation of the National Living Wage. To mark the date, the Resolution Foundation investigated the impact of the pay rise. The foundation analyses the living standards in the UK, and conducted the report on 500 organisations from June 6th-June 16th. Ipsos MORI aided in the investigation, a UK market research organisation.
36% of businesses in the report have responded to the increase by increasing the prices of their products and services. 29% stated that as a result they lowered their profits in order to fund new wages in their companies. The Resolution Foundation stated that organisations and businesses that could not afford to fund the new National Living Wage did not have strong business models, and advised that they changed their business schemes in order to keep up with new government funding in a post-brexit UK.
By 2020, the foundation has predicted that the National Living Wage will be reduced by 40p, thanks to a Brexit Vote. This is because of inflation prices and the change in UK import and export tax. The number is not fixed and should not be relied on however. With no-one really knowing what will happen once we invoke article 50 and leave the UK, it’s safe to say that nothing is set in stone for the future of the UK. However it is best to assume that for an immediate future, there will be a slight dip whilst we fix the immediate issues such as UK VAT and other taxes, which take precedent from EU law.
The report comes after the Office for Budget Responsibility predicted a job loss of over 20 000 by 2020 by large organisations. However the report seems to predict otherwise. It seems that organisations, for the moment, are reacting well to change. No job losses have been reported by any company or worker that can be related to the rise in pay.
The pay rise was implemented on April 1, and serves as a baseline for minimum pay. Over 25’s must recieve £7.20 minimum an hour for their work. However under 25s can still recieve the older and more outdated pay for their age group. Companies such as IKEA have welcomed the change openly, with all customers recieving the new “living wage”. The living wage encompasses all workers of all ages, and constitutes of £8.25 nationally, and £9.40 for those in London stores. The Swedish company describes the change as a welcome one for their hard workers throughout their UK stores.
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