8% reduce reward package in response to national living wage


Less than one in 10 (8%) employer respondents who have seen their wage bill increase following the introduction of the national living wage have reduced aspects of their reward package, such as paid breaks, overtime or bank holiday pay, in response to this, according to research by the Resolution Foundation.

The survey of 500 organisations, conducted in early June 2016, also found that 35% of respondents have seen an increase in their wage bill this year because of the national living wage.

The national living wage came into effect in April 2016. The mandatory £7.20 an hour rate applies to staff aged 25 and over.

The research also found:

  • 6% say the national living wage has increased their wage bill to a large extent.
  • 16% of respondents expect the national living wage to increase their wage bill at some point in the future.
  • 14% of respondents who have seen an increase in their wage bill have employed fewer staff, offered fewer hours or slowed recruitment.
  • 12% of respondents have invested in technology in response to the introduction of the national living wage.
  • 15% of respondents have invested in more training for staff.
  • Around a third (36%) of respondents have increased their prices as a short-term reaction to the national living wage, and 29% have taken lower profits.

Conor D’Arcy, policy analyst at the Resolution Foundation, said: “The national living wage has already delivered a welcome pay boost to millions of workers. The big question has been how employers would respond. The evidence so far is that firms have absorbed some of the impact on their wage bill, while passing on a share of those rising costs to consumers through higher prices.

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“Encouragingly, evidence of workers seeing their hours cut or even losing their jobs has so far been relatively limited. The challenge now is for firms to continue to respond positively to the national living wage, particularly by raising productivity.

Brexit is likely to reshape the landscape in which many low-paying sectors operate. This means that the expertise of the independent Low Pay Commission is more important than ever, and ministers should carefully heed their advice.”