A new survey has suggested that a number of Small and Medium-sized Enterprises (SMEs) believe that the introduction of a new National Living Wage (NLW) has had “damaging effects” on their day-to-day operations.
The policy, which was first announced by former Chancellor George Osborne last year, has raised the minimum pay rate for workers over the age of 25 to £7.20 per hour.
According to new research from the British Chambers of Commerce (BCC) around a quarter of UK firms have been forced to cut recruitment since the NLW took effect in April 2016.
A third of SMEs added that they would be forced to follow suit if planned gradual wage increases up until the year 2020 go ahead as proposed.
By 2020, the NLW for over-25s is expected to hit more than £9 per hour.
The BCC’s study found that 34 per cent of firms have increased pay – either directly to affected staff or to maintain differentials through their workforce – since April.
It suggested that firms had suffered “damaging effects” driven by the changes.
However, it added that the negative impact of the NLW is yet to reach the “dramatic levels” predicted by numerous experts at the point of its introduction.
