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National Living Wage

As of this month (April 2016) the government has introduced a ‘National Living Wage’ which entitles all workers over 25 to a minimum pay rate of £7.20 per hour. This equals a 50p rise per hour on the current National Minimum Wage. The National Living Wage is set at £7.20 in 2016, rising to over £9 by 2020, as part of an attempt to ‘move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society’ (HM Treasury, Budget, July 2015).

In order to support organisations the government has introduced a reduction in Corporation Tax, a source of saving that could help organisations pay for the additional labour costs.

What impact might the National Living Wage have on the UK labour market?

The best case scenario is that organisations will adopt new processes and improve productivity in tandem with paying higher wages. The crucial determinant will be how organisations respond. Positive strategies could include investment in workforce skills, alongside new job design and team formations.

Are you ready for the changes?

If you’re an employer, you’ll need to make sure you’re paying your staff correctly, as the National Living Wage will be enforced as strongly as the current National Minimum Wage. As an international leader in the provision of personnel to the Engineering Industry, Orion Group prides itself on complying with legislation that regulates our industry. We believe that in sharing our knowledge it will help our candidates and clients navigate the complexities of the evolving working environment.
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