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Employment unaffected by National Living Wage, survey reveals

11 Jul 2016

Employers have raised prices or reduced profits rather than deciding to cut jobs in response to the introduction of the National Living Wage (NLW), research from the Resolution Foundation suggests.

The think tank’s report on the issue is based on a survey of 500 businesses, carried out before the EU referendum. The research reveals how employers responded to the introduction and implementation of the NLW.

36% of respondents have raised prices in response to the new wage, whilst 29% stated that they have reduced their profits in order to compensate for the NLW, the survey found.

However, the data also revealed that 14% of firms have decided to use less labour, either through reduced recruitment levels or by supplying employees with fewer hours.

Conor D’Arcy, Policy Analyst at the Resolution Foundation, commented: ‘Encouragingly, evidence of workers seeing their hours cut or even losing their jobs has so far been relatively limited. The challenge now is for firms to continue to respond positively to the NLW, particularly by raising productivity.’     

Introduced in April, the NLW requires employers to pay employees aged 25 and over at least £7.20 an hour.

Employees aged between 21 and 24 continue to receive the National Minimum Wage (NMW) of £6.70.

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