From April 2016 there will be a new National Living Wage (NLW) premium which will see a rise in wages of £0.50 for those over 25. On top of the current National Minimum Wage (NMW) this will see an increase from £6.70 to £7.20, with a planned gradual increase until it meets £9.00 in 2020.

According to the Telegraph there is an estimated 3.2 million people that will be significantly affected by the rise. The majority are in the North; particularly Sheffield, Nottingham and Birmingham and areas where there is a more concentrated low-paid workforce.

Phil Jones, MD of ISS Facility Services Landscaping, expressed concern over the changes in ProLandscaper, “It is a means of the chancellor cutting welfare payments and replacing the burden of replacing lowly paid workers’ lost income on employers.” (Dec 2015).

George Osborne has justified cuts to in-work benefits by arguing that the government is transitioning the UK from being “a low-wage, high-welfare economy to a high-wage, low-welfare economy”. Labour says this claim is not reflected by wage growth figures.

As reported in the Guardian, ‘The 10 years between 2010 and 2020 are set to be the worst decade for pay growth in almost a century’. Research shows that ‘real-terms wage growth is forecast by the Office for Budget Responsibility to average at just 6.2% in this decade, compared with 12.7% between 2000 and 2010.’

Some, like the Resolution Foundation, are calling for ‘local leaders and businesses across the country to work together to minimise any job losses’ and ‘work closely with employers to ensure that the national living wage is a success, particularly in low-paying sectors.’

A Scottish government spokesman told the BBC that they encouraged ‘firms to recognise [the NLW] benefits including improved morale, higher productivity and lower absence rates’ in staff. But they also stressed that the rise ‘falls well short of the living wage of £8.25’ as recommended by the Living Wage Foundation.

There is uncertainty over how this will affect businesses in the future. The hope is that workers who are paid more will be more productive. Many businesses already pay above the NMW and will not see dramatic differences.

For those who do not it could result in choice between raising costs for customers or cutting down on the workforce. And with the cuts to welfare the raise may not be enough to meet the loss of benefits for some workers anyway. Definitely some food for thought for landscaping businesses that rely on low wage labour…