The Impact of Rising Minimum and National Living Wages in April 2019
Both the minimum wage and the national living wage will increase on 6 April 2019, leaving millions of workers better off. Wages are a necessary cost for every business, but sometimes as an employer you can feel like the pressure of increasing wages never ends. We take a look at what the increase might mean for you.
The New Wage Increase
Announced in the 2018 Budget by Chancellor Philip Hammond, from April 2019, the Minimum Wage and National Living Wage will be as follows:
· Workers aged 25 and over – £8.21 an hour (National Living Wage)
· Workers aged 21-24 – £7.70 an hour
· Development rate for workers aged 18 to 20 – £6.15 an hour
· Young workers rate for workers aged 16 to 17 – £4.35 an hour
· Apprentice rate (workers under 19 or in the first year of apprenticeship) – £3.90 an hour.
What is the difference between minimum and living wage?
No matter the company size, the minimum wage is the lowest remuneration that employers can legally pay their workers, it applies to those aged 16 to 24. The National Living wage is higher and acts as a target for all employers, as well as being the minimum an employer can pay a worker over 25.
What does the wage increase mean?
The Low Pay Commission (LPC), who advises the government on wage rates, have indicated that the increase will benefit around 2.4 million workers. This means that over 2 million of the UK’s lowest paid, full-time workers will benefits from receiving on average an extra £690 per annum.
Subject to sustained economic growth, the government’s aim is for the national living wage to reach 60% of median earnings by 2020.
What does it mean for businesses?
As an employer, when it comes to wages it can feel like the pressure never ends. It is important to understand any government wage increase and how it can affect your business and employees. Raising the minimum wage on a regular basis helps families keep up with price inflation. But businesses need to be careful that this increase does not adversely affect business operations.
Employers with tight budgets may lay off employees to remain solvent or freeze employment opportunities and other pay bonuses due to the increase, and businesses may pass on the cost of increased wages to consumer goods and services. It is important to ensure any changes to wages do not affect staff morale, in turn negatively impacting your employee engagement strategy or your staff retention and profitability.
And don’t leave everything to the last minute
Organisations must stay abreast of the ever-important minimum wage issue, stay ahead of the competition and ensure a robust employee engagement strategy amidst economic uncertainty. Track work-hours, calculate billable hours, create comprehensive reports, and plan for mandatory wage increases. Now is the time to invest in employee engagement.
Why you should invest in employee engagement
Pay is a great way to engage employees and improve out of work time, thus adding to their efficiency and in turn business productivity. But there are many other ways to increase employee engagement and boost business performance. Highly engaged employees achieve up to 5x more revenue growth, thereby adding considerable additional value to their employment with you.
What do your employees care about? Saving money? Discounts? Employee benefits? Maybe even more so with people not knowing the potential impact of Brexit, and the fact that the real living wagewill still be higher than the National and Minimum Wage even with the planned increase. The cost of living keeps going up, and your employees feel it every day.
Save your employees up to £1,200 annually with our discount outlet, 24/7 access to an online doctor, care support, mental health advice and more with the all-in-one Centralus portal. Enhance employee engagement with our expert consultancy and range of tools for your business through amazing benefits. Boost business performance through expert consultancy on payroll,pensions, employment law and much more. Learn more about how we can help you enhance your employee engagement strategy and fulfil your business growth strategy at absolutely no cost to your business here.
Ensure your business is planning for the increase in wage rates through developing your engagement strategy and staying ahead of your competition by offering your employees more. Learn more about the Centralus Employee Engagement Consultancy and reap the benefits for both your business and your employees.