How Will The National Living Wage Increase Affect Businesses?

4th April 2022

The 1st April 2022 was a big day for employees who work on an hourly wage. The National Living Wage (NLW) rose to £9.50 – an increase of 59 pence or 6.6%. 

But what exactly is the NLW and how could this latest increase affect your business?

What is the National Living Wage?

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 and, by 2024, it is predicted to be £10.33 or higher and from the lower age of 21.How Will The National Living Wage Increase Affect Businesses?

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 (ie/ key workers, care workers, food distributors etc).

How can it impact a business?

Whilst this latest increase was announced last year, many businesses may still be unaware of how this increase will affect them. 

The increase is great news for workers but, 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 this increase in wages may be a struggle.

What can businesses do to minimise this impact?

In a nutshell, the simple answer is to sell more of your products or services in order to offset the 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 off 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.How Will The National Living Wage Increase Affect Businesses?

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 workstudy evidence base, the reality of the commercial world is that sometimes you have to make rapid tactical decisions
  • Modern workstudy – We cover how workstudy data can be applied to generate insights to help businesses improve their productivity. Our modern workstudy approach combines multiple workstudy and analytical techniques to visualise and quantify opportunities

Contact our team today to discover how we can help your business.