Tag Archives: national living wage

Costs and benefits of the National Living Wage

Posted on by

English money

By Heather Cameron

Britain’s bosses have been urged by the government to prepare early for the introduction of the National Living Wage (NLW) in April next year.

Firms are advised to follow four simple steps:

  • know the correct rate of pay – £7.20 per hour for staff aged 25 and over
  • find out which staff are eligible for the new rate
  • update the company payroll in time for 1 April 2016
  • communicate the changes to staff as soon as possible

Support

This push coincides with a new poll revealing that 93% of bosses support the Living Wage initiative, with a majority believing it will boost productivity and retain staff.

This is supported by new research by the University of Strathclyde and the Living Wage Foundation (LWF), which uses real-life case studies and evidence from employees working for accredited Living Wage employers. It suggests that paying staff a living wage leads to many business benefits – such as staff retention, more efficient business processes, improved absenteeism and better staff performance.

Potential benefits

Many of the findings highlighted relate to research on the London Living Wage (LLW). Among these include:

  • 50.3% of employees receiving the LLW registered above average scores for psychological wellbeing, a sign of good morale, compared to just 33.9% of non-LLW employees studied
  • an average 25% reduction in staff turnover was reported for organisations moving to the LLW
  • and 70% of employers studied reported reputational benefits through increased consumer awareness of their commitment to being an ethical employer

Estimates show that 4.5 million employees will see a rise in their wages as a result of the introduction of the NLW in 2016, with a further 2.6 million gaining from spillovers. By 2020, 6 million employees are predicted to have received a pay increase.

Up to one in four workers are expected to experience a significant positive impact from the NLW. If the result is indeed a happier workforce, perhaps the knock-on effect for businesses will be improved productivity.

There will however be variation across different parts of the UK and across different households, depending on how the NLW interacts with the tax and benefit system (it should be noted that many estimates were made prior to the u-turn on welfare reform). And let’s not forget that the NLW is not for all as under-25s will not be eligible.

Costs to employers

The impact on employees and therefore employment generally, will also depend on the actions firms take to prepare for the NLW in order to mitigate costs.

Indeed, the research from Strathclyde and LWF recognises that implementing the NLW will inevitably involve initial costs to businesses and could represent an issue for some companies more than others.

According to the Federation for Small Businesses, a negative impact on business is expected by 38% of small employers, with many expected to slow their hiring and raise prices.

It has been estimated that the NLW may lead to an increase in the unemployment rate by 0.2% points in 2020; resulting in around 60,000 more people unemployed and total hours worked per week across the economy around 4 million lower.

Businesses may also look to employ those under the age of 25 who won’t be eligible for the NLW. This could particularly impact on those sectors with a high proportion of lower paid employees, such as social care – a sector that is already under financial pressure.

The roll out of the Living Wage has certainly raised concern over potential costs for councils, which are having to deal with increasing budget cuts. The Local Government Association (LGA) has estimated that the NLW could cost local authorities £1bn a year by 2020/21.

So while increasing wages for low paid workers may seem like a no-brainer in the bid to help reduce in-work poverty, the full impact on employees, employers and therefore the economy, remains uncertain. Only time will tell what the true impact of the NLW will be.

Further reading: if you liked this blog post, you might also want to read our previous blog on the Living Wage. 

Our popular Ask-a-Researcher enquiry service is one aspect of the Idox Information Service, which we provide to members in organisations across the UK to keep them informed on the latest research and evidence on public and social policy issues. To find out more on how to become a member, get in touch.

Follow us on Twitter to see what developments in policy and practice are interesting our research team.

Public health in Scotland … problems and solutions

Posted on by

scotpho logoBy Stacey Dingwall

On Friday 11 September 2015 I attended the annual seminar of the Public Health Information Network for Scotland (PHINS) at Glasgow Royal Concert Hall. Now in its 16th year, the event provides an opportunity to keep up to date with the latest developments in public health related issues and research at both the local and national level.

This year’s sessions were focused around two themes: health inequalities in Scotland, and active travel.

Health inequalities in Scotland: causes and interventions

The first speaker of the day was David Walsh of the Glasgow Centre for Population Health (GCPH). David outlined the findings of research he’s been involved in, looking at explanations for excess mortality in Scotland compared to the rest of the UK and Europe, and in Glasgow particularly. Currently, there are still 5,000 ‘extra’ deaths in Scotland than in England each year, i.e. excess mortality.

The session particularly focused on the findings of the 2013 study, Exploring potential reasons for Glasgow’s ‘excess’ mortality: results of a three-city survey of Glasgow, Liverpool and Manchester. These three cities are home to the highest levels of deprivation in the UK and consequently, the lowest life expectancies, with Glasgow being the worst of the three. David explained that over 40 potential causes for this were synthesised as part of the research, with the following identified as among the most plausible explanations:

  • The scale of urban change post World War 2 had a larger impact on Glasgow, in the form of slum clearances, the construction of poorer housing and large amounts of high rise flats, and limited investment in maintenance of this housing.
  • The ‘socially selective’ new towns programme created social divisions, with only the wealthier and higher-skilled able to move there.
  • Different responses at the local political level – Manchester and especially Liverpool vehemently resisted the Conservative policies of the time, however this was not the case in Glasgow.

The morning also saw a presentation from Jim McCormick from the Joseph Rowntree Foundation (JRF) on rising poverty levels in Scotland and the UK since the recession. Jim suggested that the increasing casual nature of work now seen in the UK is what is driving the rise of poverty. He highlighted the hourglass shaped economy we now have, due to the disappearance of mid-level semi-skilled jobs alongside a rise in higher- and lower-skilled jobs.

An analysis of whether a National Living Wage would bring different groups up to the JRF’s annual Minimum Income Standard by 2020 was also presented; according to their findings, the only group that will be close to it is single people without children.

Physical activity and active travel in Scotland and the UK

The first session after the break saw another presentation from GCPH – this time from Bruce Whyte on trends and challenges in active travel in Scotland (i.e. walking and cycling).

It was highlighted that travelling by car remains the most popular mode for people to travel to work, despite the fact that most of the journeys undertaken are short (i.e. less than two miles long). Bruce highlighted successful initiatives in this area in Glasgow, however, including the cycle hire scheme and the development of the Kelvingrove-Anderston cycling and walking route, on which GCPH published a report earlier this year. His presentation included comment from those who use the route on its health and safety benefits, and it was suggested that its success has led to impetus for similar projects in the city.

The following presentation came from Niamh Shortt of the Centre for Research on Environment, Society and Health (CRESH) at the University of Edinburgh. She looked at the findings from research into whether the physical environment has an impact on inequalities in physical activity and active travel. Tying in with the first theme of the day, this session noted the impact of health and income inequalities on physical activity rates and travel mode choices.

The morning was rounded off by Stuart Hay of Living Streets Scotland, a charity working to promote the benefits of walking and ensure that the country’s streets are fit to do so. Stuart praised the work of the Scottish Government in this area, highlighting the development of a separate walking strategy for the country. He concluded that we have the policy infrastructure in place, and it’s now time to ensure it is implemented.

Follow us on Twitter to see what developments in public and social policy are interesting our research team.

Read our other recent articles on public health issues:

The Idox Information Service can give you access to a wealth of further information on health inequalities and active travel, to find out more on how to become a member, contact us.