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Employers urged to prepare for minimum wage rise

Employers are being urged by the government to do more to prepare for the coming increase in the minimum wage.

In April 2016, the “living wage” will be introduced, meaning that everyone over the age of 25 will have to be paid a minimum of £7.20 per hour. Chancellor George Osborne has stated his intention to raise this to £9 per hour by 2020.
However, a survey of 1,000 businesses showed that few are ready for the changes, and consequently risk falling foul of the law on 1 April. Most companies surveyed had not updated their payrolls, nor told their employees about the changes.
The policy has been controversial, due to uncertainty about its effects and even the likelihood that jobs will be lost due to the new measures. Whilst many employees welcome the changes, leaders from the business world have warned of serious unintended consequences. Higher costs to employers mean that savings will have to be found elsewhere – a challenge at a time when economic growth is still fragile, cuts are still taking effect and interest rates are set to rise in the foreseeable future. In some sectors, such as social care, there is the risk of compromised services as fewer carers can be employed for the same amount of money. The same is true in other traditionally low-paid sectors, such as retail and hospitality, where employers will be pushed to make ends meet without major changes to their businesses. In other cases, employers will have to pass on costs to customers or seek savings in other areas.

Experts have suggested that the introduction of the living wage could cost 60,000 jobs over the next five years. There are also likely to be teething troubles as employers learn of their obligations under the new law, and adapt to the changing circumstances. 

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