money national living wage comment

With the Conservative’s pledging to raise the National Minimum Wage from the current rate of £8.21 per hour for over 25s to £10.50, as well as extending the new minimum wage to those 21 and over, TPG DisableAid’s MD Alastair Gibbs discusses what affect this could have on the mobility sector.

Following the announcement by the Chancellor Sajid Javid of the Government’s pledge to raise the National Living Wage in the next five years, organisations representing business warned of the impact the move will have on business, particularly at a time of rising operational costs.

One sector that is particularly at risk is retail, with many high street and town centre retailers already struggling to cope with a rapidly-shifting retail landscape which is seeing a rise in internet shopping, squeezed margins and dropping footfall.

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By Alastair Gibbs, Managing Director of TPG DisableAidsalastair gibbs TPG DisabledAids Headshot

“My first thoughts are that it is important to pay employees their true worth to the company. In principle, I would support any mechanism that brings workers above the poverty line. However, this significant rise in National Living Wage has such far-reaching consequences that I firmly believe jobs will be in danger in the short term and the affordability of our services in this industry will impact on those least able to afford it.

“It must be remembered that a very high percentage of customers in this industry are not able to work due to their disability or are not earning due to their age and are reliant on pensions or benefits.

“If the NLW rises to £10.50 per hour, it will add around £6,000 cost on to every employee, not just those on the minimum. Then you have to take into account employers National Insurance contributions of 13.8 percent and employers pension contributions of 3 percent, as well as the fact that those already on a higher wage would expect to maintain that differential due to qualifications or time served.

“The upshot of this is that any business with a typical 10 percent operating margin will need to increase turnover by £60,000 per employee to maintain the status quo.

“Clearly this is going to be extremely difficult to achieve and will result in increased pricing to our customers, private, NHS and Local Authority, who all will bear the cost.

“My other concern is that this is potentially applied nationally when the cost of living is not the same throughout the country. Here in the West of England, it is entirely possible to rent a three-bed family home for around £700 per month. In the South East, my son pays £1800 for a one-bedroom flat. So, what might be considered necessary in the Home Counties would be seen to be excessive in more rural regions.”

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https://i1.wp.com/thiis.co.uk/wp-content/uploads/2019/10/money-national-living-wage-comment.jpg?fit=1000%2C639&ssl=1https://i1.wp.com/thiis.co.uk/wp-content/uploads/2019/10/money-national-living-wage-comment.jpg?resize=150%2C150&ssl=1Calvin BarnettGovernment & LegislationNewsroomPeopleRetailer NewsThoughts and opinionscosts,Government,High Street,mobility retailer,National Living Wage,retail,Sajid Javid,TPG DisableAidsWith the Conservative’s pledging to raise the National Minimum Wage from the current rate of £8.21 per hour for over 25s to £10.50, as well as extending the new minimum wage to those 21 and over, TPG DisableAid’s MD Alastair Gibbs discusses what affect this could have on the...News, views & products for mobility, access and independent living professionals