The Reality of the New National Living Wage
The recent announcement of a new National Living Wage in George Osborne’s 2015 budget has created more than a stir with businesses across the UK, particularly those reliant on part-time staff. Those businesses typically fall into the hospitality sector, with 26% of their staff working on minimum wages, but travel, sport and leisure, and small businesses are also set to be hardest hit.
In summary, the Chancellor has proposed to raise the minimum wage from £6.50 per hour to £7.20 by next year, and £9 by 2020. The changes will effect staff aged 25 and over, and although the government have promised to increase national insurance employment allowance from £2,000 to £3,000, many businesses are still anxious about the future.
The main concern is that the maths simply don’t add up. Through working to an eventual goal of £9 per hour for employees by 2020, this would mean a 6% rise in wages every year.
Put this into the context of our rate of inflation, which is hovering around the zero mark, and it becomes clear that this could put a real strain on businesses. The biggest worry, is that this could result in reduced hours, stunted business growth and unemployment.
In another bid to placate small businesses, Osborne has increased the annual investment allowance from £25,000 to £200,000. Again, this provides small comfort for worried SME’s with a question mark over their ability to invest in their businesses as salary costs rise.
Although the tone has been set by the Chancellor’s 2015 budget, ways of minimising its impact, and working smarter are within reach.
There are ways of managing spiralling costs to minimise the impact of the new National Living Wage. The key, is using the right tools to effectively schedule staff. HR software provides an accessible way to do this, for businesses across sectors and of all sizes.
For some time, Selima have been working with companies to develop a solution that actively lowers salary costs, using. Smart use of technology can forecast salary costs and compare them to budget whilst intuitively factoring in things like bookings, events and the weather.
Clever staff scheduling can have a big impact on your wage bill, check out our ROI calculator to see if you can save.