SMEs worried about the impact of new national living wage
  • 10th Dec 2015
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The Conservative party has come under fire from the Federation of Small Businesses (FSB) following the announcement to introduce a “national living wage” of £7.20 per hour from April 2016.

This new minimum hourly rate applies to all employees aged over 25 who work 30 hours or more each week, and is projected to rise to at least £9 per hour by 2020.

The FSB carried out a survey of over 1,200 members to gauge attitudes towards the plans, and found that 38% of small businesses expect the new wage to negatively affect them. When considering the planned increase to at least £9 per hour, 54% argued that it would hurt their business. Some small firms are planning to raise prices and slow the pace of hiring to counter the impact.

Many businesses who responded negatively to the plans work within highly competitive sectors with tight margins, such as the food service and hospitality industries. FSB chairman John Allan argued that for these businesses, “There is a real risk that higher enforced statutory wages will lead to fewer jobs being created and, unfortunately in some cases, job losses”.

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