Lovewell’s logic: How effective is the national living wage?

Debbie Lovewell-Tuck

The national living wage was back in the headlines this week, when restaurant chain Zizzi was reported to have reviewed how tips are distributed to waiting staff and to have cut back on the choice of free meals offered to employees.

Even before the national living wage came into effect earlier this month, stories began to emerge of organisations that have taken similar action in cutting or reducing discretionary benefits in order to find the new minimum level of pay for workers over 25. With this week’s news, Zizzi joins a growing list of organisations that have reportedly done so, including Caffé Nero and a number of retailers.

There’s no denying that for those involved, this is an emotive issue. The benefits concerned – paid breaks, tips, premiums for Sunday or bank holiday working, and subsidised food to name but a few – may sound almost trivial to some, but to affected workforces, these can be powerful incentives that are very likely to be missed by those employees.

Personally, I wonder whether any increase in an individual’s take-home pay outweighs the cost value of the benefits they no longer receive?

After an online petition received more than 100,000 signatures, retailer B&Q was prompted to compensate employees for up to two years to ensure that none were left worse off by its plans to cut Sunday pay and reduce bank holiday pay and bonuses for some staff in order to fund higher minimum pay levels for all employees.

When taken to task over the measures organisations have adopted in response to the national living wage, the Chancellor has openly stated that such cuts are not in the spirit in which the legislation was intended.

Although the government has said that it will place pressure on profitable organisations that are believed to be acting against the national living wage, just how it intends to prove they are doing so is not clear. A number of other well-known organisations have stated that recent changes to pay and benefits structures are not linked to the introduction of the national living wage. Surely that is a little too coincidental though?

So with workers losing out in other areas, can the national living wage really be said to have met its objectives?

Sign up to our newsletters

Receive news and guidance on a range of HR issues direct to your inbox

This field is for validation purposes and should be left unchanged.

Or is it a waiting game to see how effective it will truly be?

Debbie Lovewell-Tuck
Tweet: @DebbieLovewell