The National Living Wage of £7.20/ hour is now law. UK unemployment rose for the first time in 7 months. Is there a connection? Too early to tell, some might say – but we know that’s not true. We can tell. Price goes up, demand goes down. 1.8m workers have been given a pay rise with no corresponding increase in productivity. That doesn’t work. And the anecdotal evidence is there, from fruit picking to retail. More than 60,000 companies could face immediate difficulties (an estimated 15,000 could end up going bust) and will have to take measures to address the increased wage bill. These could include cutting back on perks, reducing overtime and cutting bonuses as well as layoffs – and ironically cutting wages of under-25 workers, who are arbitrarily not affected by the Living Wage. The Chancellor, who doesn’t understand any of the basics of running a business, thinks cutting back on staff benefits is against the ‘spirit’ of the law and wants to intervene if possible. It seems like George is hell bent on forcing companies into layoffs. And the least productive workers will go first. Good luck to the weakest in the workforce. They will need it.
Published April 20, 2016