Industrial strategies? Exploring responses to the National Living Wage in low-paying sectors

Document type
D’Arcy, Conor
Resolution Foundation
Date of publication
19 December 2016
Employment, Poverty Alleviation Welfare Benefits and Financial Inclusion
Social welfare
Material type

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This report examines the impact of the National Living Wage (NLW) in the six months since its introduction. It focuses solely on low-paying sectors in order to home in on the kinds of employers most likely to have staff earning at or close to the wage floor, and therefore facing the biggest adjustment. The evidence is gathered from a representative survey of 800 employers in key low paying sectors and semi-structured interviews with 15 firms spread across these lower-paying sectors of the economy. The key findings are:

  • So far no dramatic changes are visible at an aggregate level. However some employers interviewed expressed concerns about their ability to keep pace with the rising wage floor over the next few years.
  • Isolating the NLW’s impact from other pressures and changes is difficult as this research was carried out three months after the decision to leave the EU. On the whole, however, the labour market response in the latter half of 2016 has been minimal.
  • For low-paid employees, the findings here generally represent good news, with some surprising upsides in relation to increased perks, greater focus on progression and more productivity.

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