National Living Wage Rise: How should your business react?

The UK Government announced that the minimum wage, also known as National Living Wage, will increase to £11.44 per hour for workers over 21 from April 2024. The minimum wage is currently set at £10.42 per hour for workers over 23, and to £10.18 per hour for workers aged 21-22. When the new rate takes place in April, this will represent an increase of 9.8% for over 23s, and of 12.4% for over 21s.

This April's increase represents the biggest ever increase in the National Living Wage. The pay boost, worth £1,800 a year for a full-time worker, will benefit 2.7 million workers, according to an estimate from the Department for Business and Trade (DBT). Chancellor of the Exchequer Jeremy Hunt commented: “On 1^st April all full-time workers on the National Living Wage will get a pay rise of over £1,800 a year. That will end low pay in this country, delivering on our manifesto promise.”
KPI Sales Director Joe Jardine said, "With the cost of employing two people full time on a 40-hour week now in the region of £50,000 a year, businesses need to plan their recruitment meticulously to ensure they get the most value from their human resources. Candidate attraction, recruiting, training and retention will be absolutely key to the profitability of departments, depots and companies as a whole. 

Good News for Workers and Employers?
The hike has been welcomed by the Low Pay commission, the body that advises the Government on the National Living Wage, but the CBI opted for a more cautious approach, suggesting that the Government should focus more on productivity rather than pay.

KPI’s Operations Director Estelle Raybon said, “The challenge for businesses is whether to absorb or pass on the cost, or try a blend of both. It also raises questions of whether to increase other employee's pay by the same percentage as the minimum wage or not. Either way, businesses will need to become more careful about their recruitment as employment costs rise out of sync with other prices. Increased focus on lowering attrition, maintaining attendance and improving productivity will be even more important than before."

Need help on your wage and recruitment strategy? KPI can show you a unique system to recruit better, reduce staff turnover and drive more productivity. Call KPI's Sales Director, Joe Jardine on 07874 867453 or email JoeJ@kpir.co.uk to find out more.