New legislation: Could you live on minimum wage?

HR180 hero, Tim Frear, looks at the latest on minimum wage changes from October 2016 – which might otherwise pass you by.

Where have I been for the last few weeks? Usually a month or so before October everyone is talking about the minimum wage changes, analysing the costs whilst we hear the grumble of employers having to pay more in wages…

This year it’s been very quiet on the minimum wage front. Perhaps it’s been overshadowed by this year’s big salary story – the UK Living wage.

As I sit reviewing current payroll figures for clients from a wide variety of business sectors it occurs to me that the 25p difference in minimum wages between 18-20 year olds and the 21-24 age group has quite an impact on employer’s wage bills, possibly meaning employers have good reason to object, especially this year.

Looking back on 2016, there has been a major hit on small business wage budgets. Those employers paying minimum wage were hit in April 2016 by the £7.20 National Living Wage – an increase of 50p on the basic minimum wage rate in 2015 of £6.70. This was then followed by the rise this October to £6.95 for 21 to 24 year olds. Most employers have also had to account extra money in their budgets for pension auto enrolment – currently at 1% with a provisional increase to 2% next October.

I’ve talked so far about the cost to an employer but what is the real gain for employees? If I was 22 (I wish!) working 40 hours my weekly wage would raise from £268 to £278 – an increase of £10 per week. What might that buy? At Aldi it’s a lot more than from M&S, and can equate to a family meal.

There will always be a balancing act for any government looking at the need of the employees versus that of the employer, to ensure that individual employees have enough money to live but with the provision that employers have the means to pay the new rates – whilst staying in business.

New figures this year can be found on https://www.gov.uk/national-minimum-wage-rates

Fancy a coffee? When you are looking for an HR180 hero, we’re the people you need. Simply hit the Rescue Me button or give us a call for an informal chat about exactly what’s happening in your business – we’re great listeners and really good at HR too! 0113 287 8150.