64% of retailers to extend national living wage to under 25s

Almost two-thirds (64%) of retail chain respondents are set to implement the national living wage for all employees, regardless of age, according to research by Willis Towers Watson.

Its survey of 24 UK retail chains with fewer than 5,000 employees to more than 100,000 staff, also found that 45% of respondents will pay more than the £7.20 national living wage rate, up to £7.50 an hour.

The national living wage will come into effect for employees aged 25 and over from April 2016. The mandatory rate will begin at £7.20 an hour and is expected to rise to £9 an hour by 2020.

The research also found:

  • More than a third (36%) of respondents expect the national living wage to impact higher earners.
  • Of those respondents that anticipate the new statutory rate affecting higher earners, 38% will review pay for the whole workforce.
  • More than half (59%) of respondents do not expect the national living wage to impact existing staffing models.

Tom Hellier, UK practice lead, rewards at Willis Towers Watson, said: “Only a small number of organisations foresee an immediate reduction in headcount or recruitment activity, or an increased reliance on part-time or seasonal staff, although this contradicts some research which predicts long-term job losses.

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.

“An area that does cause employers anxiety though is the potential for pay compression and, in particular, the potential costs associated with maintaining appropriate pay differentials across the organisation.

“Another common theme we see in the research is concern that the national living wage will reduce retailers’ ability to differentiate from other organisations when it comes to pay. This will emphasise the importance of brand and the employee value proposition when it comes to attracting and retaining people into lower-paid jobs, which I believe will lead to some interesting innovation in this area in the months to come.”