Implementing the government’s new ‘national living wage’ (NLW) will cost charities almost £3 million when it comes into effect next April and maintaining differentials further up the pay scale could add an additional £7 million to their salary bills, according to pay analysts, XpertHR.
The survey of 313 private sector organisations reveals that a quarter of firms would need to increase the wages of at least some staff in order to meet the proposed £7.20 an hour rate for over 25s to be introduced 1 April 2016. The burden will fall disproportionately on smaller employers; almost 17% of the workforce in companies with fewer than 250 employees will be affected, compared with less than 4% in organisations employing more than 1,000 people. Almost half of survey participants said they would need to increase the pay of other, higher-paid staff in order to maintain pay differentials in the organisation, although a third reported that differentials would be squeezed rather than maintained once the NLW was in place. Around 40% of employers expressed concern that the NLW will add complexity to the existing regulation of low pay.
Sheila Attwood, editor of XpertHR’s pay and benefits, said:
‘There are two key issues that employers need to consider when implementing the national living wage: how it is going to be funded; and whether pay differentials are going to be maintained. Our research shows that maintaining differentials could more than double the cost of the national living wage to business.’
Meanwhile, the Living Wage Foundation announced new living wage rates for around 68,000 employees working in businesses accredited by the Foundation. The living wage applicable in London increased to £9.40 an hour and that nationally to £8.25 an hour.