HR · 3 May 2016

National Living Wage sees UK workers out of pocket

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UK starting salaries have dropped 3.4 per cent on average in April.

A slight salary decline has been experienced amongst British workers due in part to the impact of last month’s introduction of the National Living Wage, a new survey has revealed.

The value of the average UK salary for new jobs has taken a hit in April 2016, decreasing by 3.4 per cent compared with March, from £34,055 to £32,899.

Research conducted by job site CV-Library demonstrated a pay increase of 0.6 per cent for the same period in 2015, further suggesting that wide economic uncertainty resulting from factors including the introduction of National Living Wage as well as the imminent EU referendum has forced small business owners to cut costs and lower employee pay.

Commenting on the data, CV-Library founder Lee Biggins encouraged small business owners to ‘hire smart’. “We anticipated a slight decline in wages this month as employers adjust to the new expenses associated with the National Living Wage, and businesses strive for stability ahead of a potential Brexit. With uncertainty ahead, it’s more important than ever that SMEs evaluate their hiring,” said Biggins.

Small business struggles associated with National Living Wage have hit the retail sector the hardest, according to the study. The average advertised salary for a new role in the sector fell by 8.9 per cent month-on-month in April, pushing overall wages in the sector down from £31,594 to £28,762.

Biggins continued to say: “Every new hire should be adding something to the bottom line, employers need to hire the best people to achieve long-term objectives. It’s also a good time to evaluate recruitment techniques and find cost-effective hiring solutions.

“Through ‘smart recruitment’, small businesses can find and retain talented professionals whilst still offering fair salary packages, without compromising on the bottom line,” he added.

More than half of the UK’s employers are expected to have wage bills impacted by the National Living Wage. A survey published late last year revealed that roughly a third of employers intended to manage the expected added costs by taking steps to improve productivity and efficiency, whilst 22 per cent planned to reduce bonuses and overtime pay to absorb costs. In total, 15 per cent of small firm owners expected to have to reduce workforces via redundancies to accommodate for National Living Wage.

Might your micro business be affected by the National Living Wage?

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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