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National Living Wage has created unsustainable cost rises

View profile for Sally Morris
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The British Chambers of Commerce has released its annual workforce survey which shows the National Living Wage, the Apprenticeship Levy and auto-enrolment could lead to reduced opportunities for investment and wage growth due to increased costs for businesses.

The annual survey interviewed some 1,400 businesses, with a fifth of businesses complained the apprenticeship levy was forcing up costs, while 8% said the same about the immigration skills charge. Three quarters of companies report an increase in costs as a result of auto-enrolment.

The Office for Budget Responsibility forecasts an increase in the National Living Wage to £8.75 by 2020. 38% of businesses said they would put up the prices of their products or services and 25 % said it would reduce pay growth.

The changes to employment legislation were designed to help improve wages and prospects for workers, but the British Chambers of Commerce is clearly concerned that high employment costs will have a negative impact on employees, and wants the government to ensure no new upfront costs or taxes are imposed on businesses for the remainder of this Parliament.

Jane Gratton, Head of Business Environment and Skills at the British Chambers of Commerce, said businesses are under increasing pressure from the burden of employment costs and said this would influence the choices they make and outcomes for employees. There comes a point at which rising employment costs can no longer be absorbed through reduced profits.