The Living Wage Debate

Despite Aldi’s recent announcement that they intend to pay 9,000 staff the full living wage, the overall feeling across UK employers is one of fear and reluctance to implement it.

When George Osborne announced that the minimum national living wage was to rise to £7.20 for over 25s from April 2016 onwards, the general reaction of employers. Aldi excluded, has been to look at their recruitment policies and focus on under 25s or look at outsourcing to self-employed workers.

The Living Wage

In a recent survey by Manpower across more than 2000 employers, many came back saying that they were scaling back recruitment plans stating that the affordability of the new living wage was a big obstacle to their recruitment plans.

The CBI have also stated that the introduction of the new living wage was a ‘gamble’ to the UK employment market with employers potentially halting recruitment altogether or finding ways of bypassing the legislation by employing people who are not entitled to it in the first place.

Conversely, living wage campaigners believe that just like when the minimum wage was introduced in 1999, employers will absorb the costs of doing so and the same will happen when the living wage for over 25s is introduced next year.

The employment landscape could potentially change with the introduction of the living wage, as employers start to favour using remote self-employed workers rather than recruiting people themselves. This could throw up some legal challenges if employers don’t follow the letter of the law surrounding the use of self-employed people and the amount of time they spend working directly for the company without the benefits that a normal full-time employee would get.

It will be interesting to see how this story develops and the impact it will have on UK employment and the types of law cases that may emerge if employers fail to implement the new living wage correctly.

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