Increase in Minimum Wage Announced: Welcome News for Some – A Worry for Others.

by | Nov 30, 2023 | All Articles, Employee Engagement

Fears Minimum Wage Increase Could Put Added Pressures on Smaller Businesses

You can tell that we’re moving into an election year with last week’s Autumn Statement from chancellor Jeremy Hunt announcing that there will be an increase in the Minimum Wage – known as the National Living Wage – from April next year. 

What are the increases to the National Living Wage?

Currently, the wage for anyone over 23 is £10.42 an hour, whilst for anyone aged 21-22 it is currently £10.18 whilst for 18-20-year-olds it is currently £7.49 an hour.

The increases will see anyone aged 21 or above receiving £11.44 an hour – bringing 21 & 22-year-olds in line with over 23s. There will also be an increase for 18-20-year olds upto £8.60 an hour. 

Apprentices will also see an increase from £5.28 to £6.40 an hour.- an increase of over 20%.

Welcome news for workers

It could be argued that this is a clever punt by the Government as it starts to plan it’s next election campaign. The reality is though that, in total, 2.7 million workers will benefit.

Nor can it be denied that these increases are welcome news for workers on the National Living Wage. The lowest paid have been the hardest hit by energy and food prices over the last 18 months. 

The increase for those aged 23 or above equates to an additional £1800 a year, whilst bringing 21 & 22-year-olds inline with 23 year-olds equates to a £2,300 annual increase.

Increased Pressures on Small Businesses 

On the flip side of this positive news, there are wider implications for the businesses who have to pay these additional wages. 

For the smaller businesses who are also suffering from the hikes in energy costs and supply line cost and supply issues, having an increase in their payroll thrust upon them by the Government could be the final straw. 

Many businesses in the hospitality sector, for example, are hugely dependent on workers in the National Living Wage bracket – whilst suffering chronically to the other price rises.

This isn’t just a heart-warming tale of fat-cat owners being forced into putting their hands in their pockets and giving back to the workers. Some smaller businesses may be forced into making some real tough decisions now. 

Kate Nicholls, chief executive of the hospitality industry body UK Hospitality, wrote on X, formerly Twitter, that the rise was;

“a reminder that although government announces it, it is businesses who deliver it and why it is so vital other action is taken to reduce tax and costs, particularly [business] rates.”

Helping Business to Help Their Employees

As part of the wider picture, there are options open to SMEs to help mitigate some of this extra cost. 

Within our portfolio or solutions, we can look at different options to help cover the increase in payroll commitments, whilst looking at other revenue-generation / cost-saving ideas to help release some of the added pressures businesses are facing.

If you would like to find out more about ways of mitigating the increases in the minimum wage, we would be happy to put forward some ideas. Please use the form below to get in touch – or why not complete our “suitability checker” to see how we could help. 

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