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National Living Wage increase threatens routine jobs

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National Living Wage increase threatens routine jobs

National Living Wage increase threatens routine jobs

The Institute for Fiscal Studies (the “IFS”) have reported that the rising national living wage could put routine jobs in danger as they are likely to be replaced through automation.

Over the past two years the minimum wage for those aged 25 or over has increased from £6.70 to £7.50, and will rise further to £7.83 in April 2018.

Furthermore, there is little sign that the risk of losing routine jobs to automation will subside. The Government has pledged that the national living wage will reach 60% of average wages, currently forecast to be £8.56, by the year 2020. The IFS has said this would treble the proportion of workers aged 25+ paid the minimum wage, compared to 2015’s figure, from 4% in 2015 to 12% in 2020.

Whilst the development of automation machines is still very much on-going, the process is slow and employers are unlikely to begin introducing automation methods for a number of years.

For now, it is important that employers abide by the current guideline regarding employee salary and ensuring that the national living wage targets are met. In order to ensure that employers are paying their employees the national living wage, employers should:

  • identify which workers are eligible to receive the national minimum wage
  • keep up to date with the correct minimum wage rates and the annual timetable for changes
  • establish which pay reference period will apply to each worker;
  • if any worker is found to be being paid less than the minimum wage, pay any arrears due to him or her immediately using the correct formula and
  • increase the worker's pay to the minimum wage level or higher; and
  • keep adequate records to prove that the minimum wage is being paid.

If you would like further information on this topic, you can contact Millie Kempley or another member of the employment team on 0345 070 6000.