Osborne proposes new national living wage in UK
UK Chancellor of the Exchequer George Osborne has proposed introduction of a new national living wage at a rate of £7.20 per hour as part of the budget this year.
When put into force in April next year, the national living wage will apply to employees aged 25 and over, increasing to around £9 per hour by 2020.
The retail and hospitality industries will be impacted the most with this measure.
The Association of Convenience Stores, which represents small independent grocery outlets, said its members will have to reduce the staff working hours, cancel investment plans or work more hours in their business themselves to overcome the impact of living wage on their businesses.
Tax and accounting services provider Baker Tilly Management said that the impact of national living wage on retailers will vary according to their specifics but an increase in labour costs of circa 30% over five years will put pressure on margins.
The retailers will, however, benefit from corporate tax reductions by 19% in 2017 and 18% in 2020. This is believed to reduce the impact of the increased national living wage.