National Living Wage won’t increase productivity

While 70% of businesses are supportive of the new National Living Wage, they do not anticipate that it will bring any improvement in productivity.

The findings come from the latest results from the Close Brothers Business Barometer, a quarterly survey gauging opinions of CEOs, MDs and other management from around the UK and Ireland.

From 1 April, workers over the age of 25 will see the minimum rate of pay increase by 50p to £7.20 – the largest increase in minimum wage since 2009.

The change will affect 1m workers and could result in some taking home an additional £900 a year, according to the Department for Business Innovation & Skills.

On the other side of the coin, the Regulatory Policy Committee estimates the rise will cost companies £804m in extra wages and staff costs.

A government survey revealed that 59% of workers “will feel more motivated at work as a result of the increase in their pay packets.”

While the workers themselves are feeling positive, findings from the Close Brothers Business Barometer suggest that business owners and managers are not so optimistic, with 50% claiming they do not believe that this will bring about a measurable increase in productivity.