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​The UK government has announced an increase in the National Living Wage (NLW), rising 2.2% to £8.91 from the 1st April 2021. This amounts to around £345 per year for an employee working on a fulltime wage. The National Minimum Wage (NMW) will also be going up.

The National Living Wage increase follows recommendations from the Low Pay Commission’s findings in late 2020, and takes into account all of the disruption to employers and employees caused by the COVID-19 pandemic, and later by Brexit.

Who gets the increased wage?

Introduced in 1999, the National Living Wage means that everyone in the UK is entitled to a certain level of payment for each hour that they work. This sets a legal precedent that workers cannot be exploited by their employer, protecting them financially for the hours they spend at their job.

When the National Living Wage was first launched, everyone over the age of 25 received it, and anyone under that age would be given the National Minimum Wage. On 1st April 2021, this is set to change. Everyone over the age of 23 will now be entitled to receive the National Living Wage, two years earlier than previously allowed.

“We welcome the increase in the National Living Wage and the National Minimum Wage for our candidates, many of who have been working throughout this pandemic and risking their own health to ensure they get a job done,” says Margo McKinlay, Managing Consultant at Search Industrial.

“It’s long been clear that the cost of living, particularly in our major cities, is spiralling, and wage growth is not keeping up to its pace. The pandemic has only widened the gap for those earning the least in our society, so it’s good to see the government take some action to rectify this.”

What affect will this have on businesses?

2020 was a tough year for most businesses, with many cut off from government support, and forced to close physical locations due to the pandemic. The economy had the biggest shock of a generation, and whilst some growth was recovered over the summer, it is by no means back to where it was pre-pandemic.

Typically employers, particularly those with smaller workforces, would respond to minimum wage increases by accepting a lower overall profit margin, improving efficiency or raising prices. However, many are struggling to find any financial breathing space at all thanks to the additional pressures of 2020.

So what affect will the National Living Wage rise have on the already tight profits of SMEs, and will it ultimately end up with workers having their hours cut?

Bryan Sanderson, chair of the Low Pay Commission, said: “Recommending minimum wage rates in the midst of an economic crisis coupled with a pandemic is a formidable task. The difficulty in looking forward even to next April is daunting.

“There are strong arguments concerning both low-paid workers – many performing critically important tasks – and the very real solvency risks to which small businesses are currently exposed. In these unprecedented conditions, stability and competence are prime requirements.”

“We have opted for a prudent increase which consolidates the considerable progress of recent years and provides a base from which we can move towards the government’s target over the next few years.”

The Living Wage Foundation goes further. They claim that the National Living Wage should be at least £9.50, or £10.85 if you live in London. Thanks to their 2020 campaign, many employers have pledged to support their employees with this amount, including Nationwide, Google, Brewdog, Everton FC and Chelsea FC.

“The manufacturing and industrial sectors are typically steady industries that offer good prospects,” says Margo.

“There are other benefits of working in this area too, such as hands-on work, a decent company culture, state pension and paid holidays often included. Employees working in warehousing and manufacturing have access to other professional benefits, alongside a decent wage.”

“For those joining the career ladder, the sector offers apprenticeships and programmes such as the Government’s Kickstart Scheme, which can provide both funding and exciting opportunities.”

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