Choose your country

Or view all businesses for sale



Over half of UK businesses will feel the impact of living wage increase

The national living wage will increase wages for more than half of all employers forcing them to make savings through improved productivity levels according to a recent survey.

The national living wage will increase wages for more than half of all employers forcing them to make savings through improved productivity levels according to a recent survey.

In the first survey to assess opinion among employers before it comes into effect in April 2016 at a rate of £7.20 per hour, over half (54%) of employers predict that the introduction of the national living wage will have a significant impact on their businesses.

According to recent data collected by the Chartered Institute of Personnel and Development (CIPD) and the Resolution Foundation in which they surveyed 1,037 employers, 18 percent of them stated that the rising wage would have a substantial impact on their wage bill.

Chief economist of the CIPD, Mark Beatson stated: ‘The national living wage was a bombshell for most employers when it was announced in July. It comes into force in April next year which doesn’t give employers much time to prepare. Hence, we found 26 percent of employers in September saying it was still too soon to say how they would manage the cost implications’.

However, in the most recent survey employers were asked what measures they would take to cope and 30 percent stated that their intentions were to improve their productivity and efficiency.

Analyst at the Resolution Foundation, Conor D’Arcy said:

‘It’s encouraging that so many firms say that they will respond to the new higher wage floor by improving efficiency. But actually delivering this will prove challenging in many sectors, and it’s important that firms are given the necessary support to boost productivity.’

The survey showed that of the 1,037 employers surveyed, the changes will have the highest impact in the retail sector (79%) and the hospitality industry (77%) closely followed by the healthcare sector (68%).

The respondents were also given the chance to nominate the three methods that they would use to compensate for the higher wage bill.

Furthermore, 22 percent of employers stated that they would absorb the costs and take a lower profit to help them cope with the raising of wages; 16 percent said that they would cut back on overtime and bonuses; 15 percent said that they would raise prices and a further 15 percent stated that they would cut their number of staff with redundancies and lower their recruitment levels.

If you enjoyed this article, sign up for a *free* account to receive the latest small business advice, features, videos and listings directly to your inbox!

Melanie Luff

About the author

Mel wrote for all titles in the Dynamis stable including, and as well as other global industry publications.


Subscribe to our email updates

Sign up to receive the latest advice, most popular businesses, special offers and much more.


I'm interested in is committed to protecting your privacy. We will use the information you provide on this form to send you marketing emails . Find out more about what we do with your information in our Privacy Policy.
Marketing Emails: You will receive newsletters, advice and offers about buying and selling businesses and franchises. We will also send you information about events relating to buying, selling or running a business.

Are you a Business Owner?

Set up your Private Seller Account and create your listing today

Get Started Here

Are you a Business Broker?

Set up your BrokerWeb Account and list multiple businesses

Get Started Here