The new National Living Wage (NLW) becomes compulsory in the UK, now employers have to pay at least £7.20 an hour to the workers aged 25 and over. The move will provide 1.3 million employees an immediate pay rise.
The Chancellor George Osborne announced the policy during the last summer's Budget, in an effort to create a higher-wage, lower-welfare economy.
Employees aged between 21 and 24 will continue to be paid £6.70 an hour under the the National Minimum Wage.
The move also brings fear of job losses as employers struggle to pay the new higher wages. According to the warning of the independent Office for Budget Responsibility, around jobs could go as a result.
The TUC general secretary, Frances O'Grady, said that, "Britain desperately needs a pay rise, and this increase is good news for those aged 25 or older."
"But the government must ensure that younger workers are not left behind; 21 to 24-year-olds will not be seeing an increase.” "This is not fair. Future wage increases must narrow the pay gap between old and young," O'Grady added.
Katherine Chapman, the director of the foundation, said that, "The job is not done when it comes to tackling low pay."
"Business who can afford to pay a rate that reflects the real cost of living should do so and join over 2,300 employers signed up to pay our higher voluntary Living Wage.”
"For profitable business or those who see themselves as innovators and leaders, simply not breaking the law on pay is not enough. Many businesses want to aim higher," Chapman said.
The director general of the British Chambers of Commerce, Dr Adam Marshall, said that, "The Government's new living wage will apply a ratchet effect to all companies' pay bills, and sits alongside a raft of other high employment-related costs.”
"While many companies have the ability to increase pay, others will struggle to do so alongside pensions auto-enrolment, the apprenticeship levy, employer National Insurance contributions, and other up-front costs.”
"Some will have to divert money from training and investment to increase pay, which could hurt their productivity. Others may stop hiring altogether, " Marshall added.
Nandini
