National Living Wage has ‘not led to job losses’

The introduction of the National Living Wage (NLW) has not resulted in mass job losses, according to a new study released today (11 July).

The report, published by the Resolution Foundation, found employers have responded to the NLW by raising prices (36%) or reducing profits (29%) rather than cutting jobs, although more will have to look at productivity-enhancing measures in the coming years.

Around one in seven of the 500 firms surveyed said they have already invested more in training (15%), while one in eight (12%) firms reported having invested more in technology in a bid to boost future productivity.

The NLW, which came was introduced on 1 April this year, requires all companies to pay staff aged over 25 at least £7.20 an hour.

Only one in seven firms (14%) whose wage bill has increased say they have used fewer workers, offered fewer hours to staff or slowed recruitment. Only 8% said they have reduced aspects of the reward package, such as paid breaks, overtime or bank holiday pay.

Conor D’Arcy, policy analyst at the Resolution Foundation, said: “The NLW has already delivered a welcome pay boost to millions of workers. The big question has been how employers would respond.

“The evidence so far is that firms have absorbed some of the impact on their wage bill, while passing on a share of those rising costs to consumers through higher prices.

“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.”