Employers have responded to the National Living Wage (NLW) by raising prices or reducing profits rather than cutting jobs, according to new research.
A Resolution Foundation survey of 500 businesses found that of those firms affected by the NLW, the most popular short-term action taken had been to increase prices (36%), followed by taking lower profits (29%).
Conversely, only 14% of firms whose wage bill had increased said they had used fewer workers, offered fewer hours to staff or slowed recruitment. Just one in twelve (8%) said they had reduced aspects of the reward package, such as paid breaks, overtime or Bank Holiday pay.
Food is one of the sectors most impacted by the NLW, which affects a high proportion of workers in agriculture, manufacturing and hospitality.
Despite the largely positive findings for workers, the Resolution Foundation added that Brexit is likely to have a major impact on the labour market in the coming months and years. It noted that sectors such as food manufacturing and domestic services, which rely heavily on EU migrant labour and have a high proportion of staff affected by the NLW, are likely to face major changes in how they recruit and pay staff, and operate their business.
