How Wage Increases Affect Businesses
10th January 23
Thorough management of costs is essential when it comes to running a successful business. But have you considered how your business could be affected via wage increases?
One such example is the National Living Wage.
The National Living Wage (NLW) is increasing
This upcoming April, the hourly minimum wage will increase by 9.7% from the current £9.50 to £10.42.
First coming into effect back in April 2016, the NLW is an obligatory minimum wage which is payable to workers in the United Kingdom aged 23 and over. In general, it has the greatest impact within the retail, hospitality and healthcare sectors.
Designed to support the wages and living standards of low-paid workers at a time when pay growth is robust across the economy, the latest increase is forecasted to put more money into the pockets of those who have been vital to the continuous running of the country during the COVID-19 pandemic (i.e. key workers, care workers, food distributors etc) and to help during the current cost-of-living crisis.
How can wage increases impact a business?
Whilst wage increases are great news for workers, for businesses, the truth is that it will put pressure on the pay differential between colleagues and management levels and, ultimately, will result in extra costs.
Managing these costs is going to be the biggest challenge, particularly for those businesses that are still recovering from the effects of the pandemic – finding the costs to accommodate for an increase in wages may be a struggle.
What can businesses do to minimise the impact?
In a nutshell, the simple answer is to sell more of your products or services in order to offset any increase. But we know it’s not as simple as that, which is where our team of productivity experts can help…
When you have been carrying out processes in the same way every day for years, it’s difficult to take an outsider’s look in order to discover where improvements can be made.
Our efficiency reviews are diagnostic tools that make a big difference to identify thousands of hours that can be freed up to trim processes – ultimately, creating savings and opportunities to reshape how that time is spent.
Additionally, gaining a true understanding of what each individual does within your business can provide a huge insight; especially for those higher paid or particularly skilled individuals. Our role studies identify precisely how specific job roles spend their time, quantifying opportunities to optimise how those roles that require specialist skills are deployed.
Improving business productivity is our forte and our business review consultants put years of experience to good use by meticulously observing and assessing your current processes to ascertain what can be done better. Small changes here and there can lead to huge improvements throughout the business as a whole and we are passionate about finding innovative ideas and solutions that will make a difference to your daily operations.
Download our practical productivity whitepapers for more information:
- Finding quick wins – While the gold standard for productivity improvement is to make great decisions based on a work study evidence base, the reality of the commercial world is that sometimes you have to make rapid tactical decisions
- Modern work study – We cover how work study data can be applied to generate insights to help businesses improve their productivity. Our modern work study approach combines multiple work studies and analytical techniques to visualise and quantify opportunities