No negative impact of minimum wage increases, study finds

The Low Pay Commission has released the findings of its research into the impact of the introduction of the National Living Wage.

6 Mar 2020| News

The evidence so far shows that there has been no negative impact of raising minimum wage levels.

This is according to the findings of research conducted by the Low Pay Commission (LPC), which found that employers had not reacted to the introduction of the National Living Wage (NLW) – a higher band of the National Minimum Wage – by cutting jobs or hours.

In fact, the opposite may be true. There has been an increase in the weekly pay growth of the average NLW of 6% over the last year, indicating that they are working an increased number of hours per week.

Further, fears that raising the minimum wage would simply lead to a greater proportion of the workforce would be in the lowest-paying jobs have been dismissed by evidence that employers are increasing the pay of workers earning just above the NLW in line with statutory rises.

Finally, the NLW jobs market remains strong, with no evidence of significant job losses or hiring slowdowns as a result of the higher wage.

The LPC noted that there were some initial negative impacts of increasing the minimum wage band, including reduced employment retention of female part-time workers immediately after the NLW was introduced. However, longer term trends appear to suggest that such reactions are short-lived.