Over half of retail chains operating in the UK intend to implement the National Living Wage increase for all employees regardless of age.
A survey of 24 retail chains operating in the UK, employing between 5,000 and 100,000 staff, by financial advisory company Willis Towers Watson (WTW) showed that 64% of UK retailers are planning to raise pay amongst their entire workforce when the NWL comes into effect on Friday.
According to the survey, it is primarily small and large retailers that will be making this offering. Mid-sized retailers, defined as those employing between 10,000 and 49,000 workers, are less likely to make the change, with only half revealing plans to raise wages for all workers.
“It is good to see that a number of employers are embracing the spirit of the law and not just doing the bare minimum,” said WTW UK Practice Lead Tom Hellier. “Lesser implementation of the NLW to all employees is lower in mid-sized employers but these organisations tend to have larger numbers of people in the under 25s bracket. With this in mind, it‘s possible that the cost implications for mid-sized retailers are simply higher.”
This will be welcome news to some, as a number of chains have appeared in recent news for plans to pay for the NWL by changing payment structures elsewhere, such as by removing bonus pay for working seasonal hours.
36% of the firms surveyed predict that the NWL will impact higher earners, with 38% of this group annoucing plans to review the payment structure for their entire workforce. However, 59% anticipate that there will be no impact on their current staffing models.
“Only a small number of companies foresee an immediate reduction in headcount or recruitment activity, or an increased reliance on part-time or seasonal staff although this contradicts some research which predicts long-term job losses,” Hellier continued. “An area that does cause employers anxiety through is the potential for pay and compression and, in particular, the potential costs associated with maintaining appropriate pay differentials across the organisation.
Another common theme we see in the research is concern that the NLW will reduce retailers‘ ability to differentiate from other organisations when it comes to pay. This will emphasise the importance of brand and the employee value proposition when it comes to attracting and retaining people into lower paid jobs, which I believe will lead to some interesting innovation in the months to come.”