Employers step up with boost to low pay

There has been some good news for workers at the bottom end of the pay scale, according to a new survey.

Analysis shows that employers, have responded positively to April’s hike in the National Living Wage (NLW), topping it up further in many cases.

The research also shows that there has been little or no negative effect on employment since the introduction of the National Living Wage (NLW) in 2016. The NLW applies to workers over the age of 23. The National Minimum Wage rates apply to those up to the age of 22.

The independent Incomes Data Research’s (IDR) latest survey is based on responses from 56 organisations, three-quarters of which are in the private sector and include the Co-op, Costa Coffee, John Lewis, Tesco and Wilko and covers more than 800,000 employees.

The median lowest pay rate across the survey is £9.28, some 37p above NLW rate of £8.91.

This is in part because many employers pay their lowest grades above the official minimum.

Ken Mulkearn, director of research at IDR, said employers paying above the NLW demonstrates change is afoot in the UK employment market.

He said: “The fact that the latest increase, at 2.2 per cent, is much lower than most of the preceding ones means that the risk of a negative impact from this year’s rise is reduced for most businesses.”

However, he highlighted some businesses may struggle to pay above the NLW due to the impact the pandemic has had on their profits.

Laura Gardiner, director at the Living Wage Foundation, said despite the incredible difficulties of the past year, they’ve seen record numbers of businesses committing to their staff and accrediting as Living Wage Employers.

She said: “This has taken our network to almost 8,000 strong.

“They have found that paying the real Living Wage has given their businesses the resilience they need to survive and prosper through the pandemic and beyond. I’d encourage all responsible businesses to consider becoming a Living Wage employer today.”

The Living Wage Foundation, is a campaigning organisation in the UK, and therefore has no legal grounding. The Living Wage for the UK is set at a recommended £9.30 per hour and for London at a recommended £10.75 per hour (these are figures published for the 2019/20 tax year).

The IDR research also found the majority (78 per cent) of employers believe the NLW is set at an appropriate level, whilst a fifth (20 per cent) feel it is too low.

Just two per cent said they think it is too high.

Louisa Withers, director at IDR, said: “Some employers also voiced concerns about the knock-on impact of a rising minimum wage on differentials with rates for staff higher up pay structures.”

IDR is an independent research organisation specialising in the pay and employment field.

For help and advice on matters relating to legal employment, contact Joanna Alexiou on joanna.alexiou@mackrell.com or at 0207 240 0521

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Joanna Alexiou

Joanna Alexiou

Associate Solicitor at Mackrell.Solicitors
Joanna joined the firm’s Employment Law team in February 2020 having previously worked at another prominent firm of solicitors in the heart of London. Joanna has worked with clients from the finance, technology, arts and culture, marketing, charity and food and drink sectors.