Government Strategy for the Future
It has been very difficult to assess the possible impact the Brexit vote is likely to have on Government strategy for the future of the National Minimum Wage and the Living Wage. In the UK, and under Government policy, we will have the highest rates of pay in the developed world by 2020 arguably, whilst improving the immediate and short term lot of the employee, whilst at the same placing a significant strain on the margins of the employer; the very worrying economic outcome being the knock on effect of job losses by way of potential redundancies.
Recently, sixteen trade bodies have written to The Prime Minister, Theresa May, asking her to abandon or at least slow down this policy of increased minimum wage payments but it would seem that the lady is not for turning with the PM’s official spokeswoman being quoted as saying “The prime minister has been clear that we want to build an economy that works for everyone, where people up and down the country have a share in benefits of the economy, and making sure that people earn a decent wage for a day’s work is an important part of that.”
It could be argued that the national living wage policy itself already makes some allowance for a downturn in economic growth because it is set in relation to median wages, and is targeting 60% of median UK pay by 2020.
It is expected that the minimum wage for over 25’s will rise to approximately £9 an hour by 2020. The national living wage was introduced in April 2016 and is currently set at £7.20 an hour.
We are of course in the very early stages of post Brexit and each commentator has an entirely different view of the potential effect of the ‘out’ vote. The signatories to the letter to the PM included The Federation of Small Businesses, the Association of Convenience Stores, the Charity Finance Group and the British Beer and Pub Association. Whereas the CBI, the biggest lobbyist group, has asked the Government to change tack only in the event of a down turn in the economy.
For further support and advice from our team on how this might impact your business, please do not hesitate to contact us on 01274 864999.