4 changes the National Living Wage could make to our lives
From paying a little more for your morning latte to a drone serving you in a restaurant, the new National Living Wage may see employers speed up a few changes that could affect your life, whether or not you're earning this new minimum wage.
Introduced on 1 April 2016, the National Living Wage has seen the pay of some of the UK's lowest paid workers increase by 50p per hour, with the new £7.20 hourly rate giving full time employees on the minimum wage an average annual pay increase of £910.
Among the welcome news for minimum wage employees and workers over the age of 25 is the plan to increase wages incrementally to £9 per hour by 2020, putting an extra £4,400 cash into the full time minimum wage worker's pocket by the end of the decade.
While the pay increase helps the lowest paid in the UK and is designed to boost morale and productivity, some employers are said to be challenged by the extra cost, particularly the retail, hospitality, construction and agriculture sectors where a higher proportion of people are on the minimum wage. These may be among the first to try to offset the cost.
While the long term impact on jobs and prices is as yet unclear, here are four changes already in the pipeline:
1. Paying a little more
Analysts say that free deliveries and free 'click and collect' services may become a thing of the past if we spend under a set amount. With human labour an essential part of getting goods to us, we may have to pay the cost of retailers and restaurants making lower value deliveries to us.
We may also pay a little extra for clothing and coffee. Retailer Next has said it will have to increase prices to cover an £27 million expected pay rise and at Pret a Manger, lattes, cappuccinos and flat whites have gone up by 10p to enable the chain to increase pay at all levels.
2. Rise of the machines
The prospect of your meal flying onto your restaurant table is not as bizarre as it sounds. A restaurant in Singapore sees dishes being flown to diners' tables by drones, which is saving staff time and boosting productivity by 25%.
The thinking behind the increased use of robots for repetitive processes is to cut down on human labour so that workers can focus on more specialised tasks. With self scan and self service technology already in our supermarkets and robots with multi-function grippers handling unpacked foods and scanning goods in manufacturing plants, the technology is here and set to grow.
3. Reduced overtime pay
One retailer has already cut overtime pay from double to one and a half times to help it reduce costs in anticipation of the National Living Wage, with another national chain given a petition of over 130,000 signatures and facing a backlash on Twitter and Facebook for its plans to cut Sunday pay and reduce bank holiday rates.
4. Job losses
It's possible that some employers will handle the increased cost by not replacing people when they leave or shedding staff, with the OBR (Office for Budget Responsibility) warning that up to 60,000 jobs could be lost as organisations try to make savings.
Care home businesses are among those saying that the costs of the NLW may see them shut down and one fifth of manufacturers claim they are considering reducing staff.
The use of more self employed contractors could be how some businesses deal with this issue. Cleaners, security personnel and others who agree to work on a self employed contract basis are not subject to the NLW.
Only time will tell what difference the National Living Wage will make to us all in the end, but we'd say the above outcomes are among the most probable.
Follow our Banner LinkedIn company page to keep up-to-date with all the latest trends and hot topics for UK professionals. We regularly post content on issues including procurement, the workplace, facilities management and much more. Or why not join us on Twitter?