"Managing People with Morecrofts"

1.5 million employees due a payrise today due to the National Living Wage

by Thomas Sutherland

I realise today is 1st April, but this isn’t an April Fool.  From today, the National Living Wage requires employers to pay workers aged 25 or over at least £7.20 per hour.

Current predictions estimate that the wages of roughly 1.5 million employees will increase as of today.

This only applies to those workers over 25, so workers between 21 and 24 years of age will continue to be entitled to the current National Minimum Wage of £6.70 or above.

This may well give rise to the slightly bizarre situation where two barristas in a café are paid a different wage for the same job.  Let’s use the example of Tom and Jerry.  Tom is 25 years old and Jerry is 24 years old.  They both perform the same job and, until yesterday, were paid the National Minimum Wage.  However, from today onwards, Tom is now paid 50p per hour more for exactly the same job.

Obviously, there are already lower National Minimum Wage rates for workers under 22 years old compared to those 22 years old and over.  The introduction of the National Living Wage therefore creates an extra tier in respect of workers who are 25 years old and over.

In an adverse way, the lower wage may lead to employers giving more opportunities to less experienced job applicants under 25.  No doubt the Government sees this gap in wages as a slight opportunity to reduce youth unemployment.

It is reported that the Government plan to increase the new National Living Wage up to around £9 per hour by 2020.  This has caused some businesses to question the affordability of wages and state that its introduction might put some jobs at risk.

Let’s just hope that employees and employers don’t think this increase in wages is an April Fools when they read this blog this morning!

Find out more about Thomas Sutherland here