A fifth of public employers forecast Living Wage job cuts
More than a fifth of public sector employers say they plan to cut the size of their workforce as a result of the introduction of the National Living Wage (NLW), according to new research.
The ‘Taking up the floor’ report, published by the Resolution Foundation and CIPD, revealed that despite making up 24% of all jobs, the public sector will make up only 11% of those affected by NLW in 2016 and 14% of those affected by 2020. This is because the private sector has a greater proportion of low-paid jobs than the public sector.
Of the six million expected to benefit from the NLW, 4.7 million will be in the private sector. But 21% of public sector employers say they were more likely to cut jobs following NLW implementation, compared to only 13% of their private sector counterparts.
The survey of 1,037 employers stated that the consequences of the chancellor’s 1% pay cap for services and recruitment within the public sector were set to be a challenge in any case over this Parliament, but “the introduction of the NLW makes it all the more pressing”.
Conor D’Arcy, policy analyst at the Resolution Foundation, said the new NLW will have a “huge impact” on the labour market when it comes into effect next April, with millions of workers set to get a pay rise and half of all employers saying they’ll be affected.
Mark Beatson, chief economist at the CIPD, added: “The NLW was a bombshell for most employers when it was announced in July.
“It comes into force next April, which does not give employers a lot of time to prepare. Hence we found 26% of employers in September saying it was still too soon to say how they would manage the cost implications.”