FWD’s Final Word: National Living Wage rises

Don’t tell me – it’s gone up again, hasn’t it?

Yes, it has. The National Living Wage (NLW) has increased to £8.21 from the first of this month. It’s linked to median earnings, which means based on projections of how the economy will fare it’s expected to reach £8.62 in 2020. The National Minimum Wage increased to £7.70.

What’s the difference?

You have to pay NLW or above to employees over 25 years old. There are different National Minimum Wage (NMW) rates for ages 16–17, 18–20, 21–24 and apprentices.

So, it’s all bottom-line cost?

Wholesalers provide a lot of jobs – more than 60,000 people work for FWD members – and operate on low margins, so these rises make a real difference, not only to the cost of doing business, but also to ambitions to recruit and retain staff. If wholesalers cut jobs, the government has less tax revenue coming in and more welfare support going out.

Isn’t the NLW a good thing?

Very much so. We all want people to be paid as much as possible. Many of our members already pay above the minimum to attract and retain good teams. But then you have to pay others more to maintain grade differentials as well. The problem isn’t the principle, it’s the size and frequency of the rises. The government acknowledges it has to set NMW rates as high as possible without damaging the employment prospects of each age group.

Which is where you come in?

Yes. The Low Pay Commission is currently visiting businesses to find out how rises will affect them and we’ve made sure wholesalers are included in the programme. The chancellor has announced a consultation to look at the effect of minimum wage rates on the wider economy and there’s a review underway of the Low Pay Commission’s remit.

What should we expect?

Well, the Labour Party has committed to raising NLW to £10 if it wins an election, and we suspect the Conservatives will aim for 66 per cent of median earnings – so staffing costs are going to go up. Our job, with our members’ help, is to ensure that doesn’t mean fewer jobs, price inflation, or a disproportionate burden on businesses that provide a lot of employment.

Can you do that?

Let’s put it this way; be prepared to invest in and nurture talent, or pass costs on to your customer, or optimise efficiency in your

With both the National Living Wage and National Minimum Wage going up again – and further rises in the pipeline – FWD balances out the pros and cons for businesses to meet the new legislation processes.

FWD National Living Wage National Minimum Wage wholesaler