Pay rise warning

Small firms ‘need help’ to offset rise in living wage


 Pay will rise in April

Small firms say a rise in the National Living Wage must be “handled carefully” to avoid being self-defeating and causing job losses.

Federation of Small Businesses director of external affairs and advocacy Craig Beaumont welcomed the 6.2% (51p) increase in the living wage to £8.72 an hour in April 2020.

“It is absolutely right that everyone is paid fairly,” he said, but warned that hiking costs for small firms also had a down side and the government must follow through with promised help for companies.

“Small businesses are at the heart of communities – creating jobs and bolstering local economies – so it’s vital that increases in the National Living Wage are manageable for small firms and do not put jobs at risk.”

The Government says the new rates represent the biggest cash increase ever in the National Living Wage rate.

  • The National Living Wage for ages 25 and above – up 6.2% to £8.72
  • The National Minimum Wage for 21-24 year olds – up 6.5% to £8.20
  • For 18-20 year olds – up 4.9% to £6.45
  • For under 18s – up 4.6% to £4.55
  • For apprentices – up 6.4% to £4.15

The new rates have been recommended by the Low Pay Commission, and have now reached the target set by the Government in 2015 of the NLW equalling 60% of median earnings by 2020. The Chancellor has indicated that he will recommend a target of two thirds of median earnings for future wage rates by 2024.

Mr Beaumont said: “This government has promised a reduction in the jobs tax through an increase in the employment allowance. With a National Living Wage increase of this size now on the horizon, it’s critical that it delivers swiftly, particularly with small business confidence plumbing new depths ahead of the election.

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