70% of retailers undecided about approach to national living wage

Pay bonuses-2015Almost three-quarters (70%) of retail chain respondents are undecided about their approach to implementing the national living wage, according to research by Willis Towers Watson.

Its survey of 28 retail chains with between 5,000 staff or fewer and more than 100,000 employees, also found that 85% of respondents will wait until the 1 April 2016 before making pay changes for their employees aged 25 and above.

The research also found:

  • Just 8% of respondents with between 10,000 and 49,000 employees plan to offer at least the national¬†living wage¬†rate to all staff, regardless of age.
  • 43% of respondents pay more than¬†half of their workforce less than the national living wage.
  • 33% said that a high proportion of their lower-paid workers are over 25.

The new mandatory national living wage will come into effect for workers aged 25 and above from April 2016. It will begin at £7.20 an hour. This is 50p higher than the current national minimum wage rate of £6.70 for staff aged 21 and over.

The national living wage is distinct from the voluntary living wage, which is calculated according to the basic cost of living and advocated by the Living Wage Foundation. This voluntary rate is £8.25 an hour, and £9.15 in London.

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Tom Hellier, UK practice lead, rewards at Willis Towers Watson, said: “Retailers are among the businesses that will be most affected by the introduction of the national living wage, mainly through an increase in fixed costs, which will rise in line with the size of the retailer. But there are other factors to consider when introducing it, such as the impact on recruitment and retention among under 25 year olds, as well as on the wider workforce and on the company’s overall reputation if not well handled.

‚ÄúWhile there are a large number of retailers that¬†will need to review their pay scales and levels to comply with the letter of the law, it is important that the spirit of the law is kept in mind too. Organisations that do the minimum may lose out to their competitors who are seen to provide higher salary levels for their employees.‚ÄĚ